Bahrain’s sovereign wealth fund is gaining full ownership of McLaren Group, one of the most revered names in British premium manufacturing, as part of long-term plans to secure a partnership with a global industry giant.
Sky News has learnt that Mumtalakat, the Gulf state’s investment fund, is on the brink of a deal with McLaren’s remaining minority shareholders to convert their equity into warrant-like instruments.
The new contracts will have the economic rights to benefit from a future ‘liquidity event’ such as an initial public offering of McLaren, but would not be classed as shares.
One banking source said they expected that the agreement could be announced later this week.
It would involve roughly 20% of the equity in McLaren being converted into the new contracts, and leave the state of Bahrain as the Formula One team-owning group’s sole shareholder.
McLaren Racing, the division which directly houses the F1 and other racing operations, does have its own external shareholders following a deal struck during the pandemic to raise capital.
The deal to be signed this week underlines the continued confidence and leadership of Mumtalakat in driving McLaren’s turnaround, according to one insider.
The Woking-based company’s convoluted capital structure has acted as a deterrent to global automotive groups’ ability to structure a long-term partnership with it in recent years.
Simplifying that structure is likely to pave the way for a technology partnership with an automotive original equipment manufacturer (OEM) in the coming years as McLaren transitions towards becoming a hybrid and electric vehicle company.
Bankers have talked up the prospect of a McLaren public listing for years, but its repeated need to tap its private shareholders for funding, and the supply chain challenges which have hindered its recovery, mean that an IPO is still likely to be several years away.
Earlier this year, Mumtalakat acquired the McLaren shareholdings of Saudi Arabia’s sovereign wealth fund and Ares Management, a major US-based financial investor.
More recently, the Bahrain-based fund was reported to have injected another £80m into the company, which makes the Artura super-car.
McLaren was hit by delays to the delivery of the Artura, which – while garnering positive reviews – has required a series of technical upgrades.
Last year, McLaren named former Ferrari executive Michael Leiters as the boss of its road-car division.
During the COVID-19 pandemic, the company was forced into a far-reaching restructuring that saw hundreds of jobs axed and substantial sums raised in equity and debt to repair its balance sheet.
In its racing division, which includes the Formula One cars driven this year by Lando Norris and Oscar Piastri, McLaren has also witnessed a turnaround under Zak Brown, who leads that arm of the company.
McLaren has also undertaken a series of corporate transactions since the start of the pandemic, when it sought a government loan – a request which was rebuffed by ministers.
Mr Walsh has overseen the sale of a stake in McLaren Racing to a separate group of investors, as well as a £170m sale-and-leaseback of its spectacular Surrey headquarters.
In 2021, it also sold McLaren Applied Technologies, which generates revenue from sales to corporate customers.
Founded in 1963 by Bruce McLaren, the group’s name is among the most famous in British motorsport.
During half a century of competing in F1, it has won the constructors’ championship eight times, while its drivers have included the likes of Mika Hakkinen, Lewis Hamilton, Alain Prost and Ayrton Senna.
In total, the team has won 180 Grands Prix, three Indianapolis 500s and the Le Mans 24 Hours on its debut.
The company saw its separate divisions reunited following the departure in 2017 of Ron Dennis, the veteran McLaren boss who had steered its F1 team through the most successful period in its history.
Mr Dennis offloaded his stake in a £275m deal following a bitter dispute with fellow shareholders.
McLaren declined to comment.