Man United strengthens IPO hand with record profit

Man United strengthens IPO hand with record profit

London: English Premier League soccer champions Manchester United reported record full year profit and revenue, strengthening its hand ahead of a planned $1 billion flotation in Singapore later this year.

The club, which intends to start pre-marketing for the initial public offering (IPO) later this month, said earnings before interest, tax, depreciation and operation (EBITDA) rose to £110.9 million ($180.6 million) in the year to end June from 101.2 million the year before.

JP Morgan, which has been appointed as a global co-ordinator for the IPO, had forecast the club would make EBITDA of £114 million this year.

The club said total revenue increased to £331.4 million, up 45 million on the year incorporating a 27% rise in commercial revenue boosted by the club’s £80 million shirt sponsorship deal with Aon Corp. That helped it swing to a pretax profit of £29.7 million, compared with a loss of 15 million last year.

Net debt fell to £308.3 million from 376.9 million a year earlier, the club said.

Chris Searle, corporate finance partner at accountants BDO, said the results augured well for the IPO but cautioned that the Glazers’ intention to use a two-tier share structure, selling non-voting shares to outside investors, could limit the appeal of the offering. “This will only be palatable to investors as long as results, both financial and on the football field, keep going the right way. If the results start going the wrong way, incoming investors may come to rue the lack of control they will be able to exercise," Searle told Reuters.

Sources have told Reuters that England’s most successful club hopes to raise as much as $1 billion from the IPO through the sale of around 25-30% of the club. However, that valuation has been met with skepticism from some commentators.

Sources have told Reuters the Glazer family, who bought the club in 2005, is planning to use some of the proceeds from the IPO to reduce the club’s debt, a burden that has made the American owners deeply unpopular with some fans. The Glazers are targeting an IPO by the end of October, sources said.