Wow - i definitely will buy 1 lot of Man U (after price corrected) and be a lifetime shareholder - so that I can attend their AGMs! Maybe goodie bags will have a free soccer ball - or even get to see Man U players. This is so exciting! Lifted the gloom off the market recently (in my case only - cos i am a Man Utd fan since 1992!
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Manchester United Goes East
The soccer club ditches London for Singapore's frothier financial shores.
The financial world's center of gravity is shifting east. That's one lesson in this week's news that Manchester United is planning to list shares on Singapore's stock exchange. The English soccer club, which was taken private in 2005 after being listed in London for 15 years, is looking to raise $1 billion in an initial public offering before the year's end.
It's a major score for Singapore's exchange, which has jousted with Hong Kong's in the last few years for the title of liveliest destination for new public companies. But it's an equally significant blow to the once-healthy IPO markets of the U.S. and Europe. Where once a listing in New York or London was a badge of honor, today overregulation in the West has made it a handicap.
That said, it shouldn't be assumed that Asia is the next-best choice in every case. It's true that a growing portion of Man U's fans today are in Asia, and that a Singapore IPO would help monetize that enthusiasm. Much of Singapore's investor base is retail, which means that the people cheering Man U from the stands are more likely to be the people in a position to buy the club's stock.
Yet recent examples suggest that name recognition in Asian consumer markets is no guarantee of success in Asian capital markets. Italian fashion house Prada and American luggage-maker Samsonite had major IPOs in Hong Kong earlier this year, hoping to cash in on China's new appetite for luxury. Prada's shares were initially priced at some 27 times forecasted earnings—a far higher multiple than would have been sought in Europe. The share price eventually cooled before the initial offering, but shares still found only a middling reception when they hit the market. Shares in Samsonite, similarly hyped before the IPO, tumbled 7.7% on their debut and have since mostly hobbled along.
Neither of those companies has Man U's obvious flaws. The Glazer family, which owns the club, is looking at some $1 billion in net debt. Soccer clubs are notoriously good at losing money. Man U is by some measures the world's most popular club and still it reported a $178 million loss in the year ending June 2010. A cynic would say that the Glazers, like Prada and Samsonite before them, are looking to float shares in Asia because Asia's are the only markets where investors are excitable enough to throw money at shiny enterprises with dodgy bottom lines.
Fans may judge this week's decision even before its financial soundness comes to light, though. The Glazers, who are American, have not been uncontroversial owners since they bought the club in 2005. Supporters in Britain bellyached at the time about foreigners who knew nothing about the beautiful game running their beloved team into the ground, both financially and on the pitch. That didn't happen on the pitch, and the decision to fund Old Trafford with capital from Southeast Asia is another cold splash of capitalist reality—a reminder that no country or financial system can take its luster for granted.
Source: WSJ