Private equity takes MotoGP for another spin with sale to itself - Financial Times

Reluctant to let go of promising investments but under pressure to sell, a UK private equity group has come up with a novel way to hold on to a company by selling it to itself.

London-based private equity group Bridgepoint is in talks with its investors to shift its stake in a company it has held for more than a decade from one fund to another, bypassing a sale to rivals.

A transfer of Dorna, a Spanish sports management company that has the exclusive rights to promote and manage MotoGP and the Superbike World Championship, is not guaranteed and talks are continuing, several people involved in the process said.

Bridgepoint, which bought Dorna in 2006 in a deal that valued the company at about €500m, declined to comment.

It comes after Bridgepoint appointed bankers at Lazard late last year to explore a potential sale, which led some of the largest private equity groups, including CVC, Eurazeo, Blackstone, General Atlantic and KKR, to express interest in the asset.

In some cases these groups made indicative bids, which Bridgepoint used to set a price for a potential sale of Dorna from a fund it raised in 2008 to the flagship fund it raised in 2017, according to several people with direct knowledge of the talks.

Under the private equity model of ownership buyout funds are rarely able to hold assets for more than a decade and are forced to sell. It is the second time Bridgepoint has moved Dorna between funds, having initially done so a couple of years after buying it in 2006.

Several institutional investors in Europe said Bridgepoint had sought to handle any potential conflicts of interest arising by appointing different committees on the selling and buying sides of the transaction.

Investors in Bridgepoint’s 2008 fund will receive about three times their money if the deal is completed, a person with direct knowledge said, adding that Dorna had an enterprise value of more than €2.5bn.

As part of the process, Canada’s CPPIB, which holds a 39 per cent stake in Dorna, will retain its stake.

Bridgepoint will not charge investors fees for the deal and its share of profits via so-called carried interest will not be paid immediately as that is calculated as part of the whole fund, a person close to the private equity group said.

“Bridgepoint think they have a great asset and they want to keep it,” said an investor in the fund. Dorna, which manages 59 events, featuring 187 races in 17 countries, has posted double-digit growth in earnings before interest, tax, depreciation and amortisation year on year, according to a person familiar with its finances.

The global sports market has proven resilient through economic cycles. It has sustained a high single-digit growth rate over the past decade, driven primarily by increasing competition for premium sporting events from broadcasters. The market is now entering a new phase of growth with increasing competition from new market entrants for access to premium sporting events.

“I am pretty comfortable with how they have managed the process,” said another European investor. “This is an asset that’s going to grow for a long time and they know the asset very well.”

But another investor said the sale raised some doubts about which set of investors were getting a better deal, asking: “The question is: is it a good buy or a good sale?”