Bridgepoint Capital, the private equity firm which owns Dorna and Infront Sports and Media, has sold a 39% stake in Dorna to a Canadian pension fund, Canadian media are reporting. According to a report from Reuters, Canada Pension Plan Investment Board reportedly paid €400 million for the 39% stake in Dorna, and will join Bridgepoint and Dorna’s management – in the figure of Carmelo Ezpeleta – in running the company.
The sum paid for the 39% stake gives Bridgepoint a healthy profit. The UK-based private equity firm purchased Dorna from CVC back in 2006, when CVC purchased the rights to Formula One and were forced by the European Competition Commission to sell the rights to the MotoGP series first. Bridgepoint is said to have paid some £400 million (about €550 million) for the 71% stake held by CVC when they took over the company.
The Canada Pension Plan Investment Board is buying into more than just MotoGP, however. With the consolidation of Infront Motor Sports under Dorna, CPPIB now has a stake in both MotoGP and World Superbikes. This sale also provides the rationale for Bridgepoint’s decision to bring both series under a single umbrella: not only does it add value to the package on offer to CPPIB, but it also eliminates competition between the two series, allowing both to grow without cannibalizing each others audience and potential sponsors.
This, rather than any power struggle between Dorna CEO Carmelo Ezpeleta and Infront bosses Paolo and Maurizio Flammini, is the more important reason for combining the two series. Ezpeleta may have come out on top in that internal power struggle, but it was as a by-product of the proposed sale, rather than as a direct intent.
Though the sale fits the timeframe for a private equity to look for a return on their investment - usually in the medium term between three and five years – and was predicted by the more financially astute media, such as our friends over at Bikesportnews.com, the investment by a pension fund is good news for both MotoGP and World Superbikes.
Pension funds tend to make investments for the longer term, and are less concerned with piling on debt on their companies – Dorna is said to have some 400 million euros worth of debt placed upon it by Bridgepoint – and more on generating a reliable and constant return, to help service their pension payments. The sale of part of Dorna will have long-term ramifications for motorcycle racing. Hopefully, those ramifications will be largely positive.
Canada Pension Plan Investment Board to Acquire Interest in Dorna Sports S.L.
Toronto, Canada (October 26, 2012): Canada Pension Plan Investment Board (CPPIB) announced today that it has signed an agreement to invest in Dorna Sports S.L. (Dorna) following the sports management company’s recent acquisition of the FIM World Superbikes Championship. CPPIB will acquire a 39% stake in the enlarged group alongside current shareholders, Bridgepoint and Dorna management.
Dorna holds the global rights until 2036 to organize the FIM Road Racing World Championship Grand Prix, known as MotoGP, the world’s most prestigious motorcycle racing series. Dorna recently expanded its group following the acquisition of the FIM World Superbikes (SBK) Championship which, together, represent the two pre-eminent motorcycle racing series in the world.
“This is a unique opportunity to invest in a leading international sports management business,” said André Bourbonnais, Senior Vice-President, Private Investments, CPPIB. “Dorna’s experienced management team has demonstrated a remarkable ability to deliver consistent and strong performance.”
Founded in 1988, Dorna is an international sports management, media and marketing company that holds the global commercial and broadcasting rights for MotoGP. Dorna delivers the MotoGP product and brand to a very broad audience globally, by leveraging the series’ rich heritage and wide popularity.
“We look forward to working together with Dorna’s CEO, Carmelo Ezpeleta, his management team and Bridgepoint to continue Dorna’s global growth and to pursue exciting opportunities to expand into emerging markets,” added Mr. Bourbonnais.
Bridgepoint managing partner William Jackson, said: “This is very good news for Dorna. I’m delighted that CPPIB is to become a fellow shareholder to support the business at a time when the sport is moving to an exciting new stage in its development and both series continue their expansion.”
Dorna CEO Carmelo Ezpeleta, added: “I welcome CPPIB as a new shareholder. Alongside Bridgepoint, we now have long-term institutional support in place as we bring together for the first time the two top motorcycle racing series under one roof and as we develop and strengthen both championships.”
The transaction is expected to close in the fourth quarter of calendar 2012 and is subject to customary conditions.
This article was originally published on MotoMatters, and is republished here on Asphalt & Rubber with permission by the author.