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Saudi PIF Buys into McLaren as Part of 550 Mln Pound Equity Raise

McLaren said PIF and Ares were providing 400 million of new capital, in the form of preference shares and equity warrants.
McLaren said PIF and Ares were providing 400 million of new capital, in the form of preference shares and equity warrants.
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Saudi PIF Buys into McLaren as Part of 550 Mln Pound Equity Raise

McLaren said PIF and Ares were providing 400 million of new capital, in the form of preference shares and equity warrants.
McLaren said PIF and Ares were providing 400 million of new capital, in the form of preference shares and equity warrants.

The McLaren Group announced a 550-million-pound ($758 million) equity investment on Friday with much of it coming from Saudi Arabia’s Public Investment Fund (PIF) and global investment firm Ares Management.

McLaren Group includes the British supercar maker as well as McLaren Racing, which competes in Formula One and IndyCar in the United States and is also entering the Extreme E off-road electric series next year.

McLaren said PIF and Ares were providing 400 million of new capital, in the form of preference shares and equity warrants.

The rest will come from existing shareholders as convertible preference shares, allowing for repayment of a loan received in June last year from the National Bank of Bahrain.

Bahrain’s Mumtalakat sovereign investment fund is McLaren’s majority shareholder with a 62.55% stake according to its website.

“Following the strategic investment into Racing that we secured last year, this successful equity raise is a key element of our comprehensive financial strategy to support the Group’s sustainable growth plans,” said McLaren Group’s executive chairman Paul Walsh.

“With these strong foundations now in place, we are well positioned to achieve our ambitions as a global luxury supercar and elite motorsport business, with Automotive as McLaren’s core profit driver.”

McLaren had a 300-million-pound equity injection from existing shareholders in March 2020 and last April completed a 170 million pound sale and leaseback deal on its Woking headquarters.

US-based investment group MSP Sports Capital also acquired a significant minority stake in McLaren Racing last December in a deal that brought in 185 million pounds and eased pressure from the COVID-19 pandemic.

Automotive revenues in the first quarter of this year were 170.5 million pounds, a rise of 145% on the same pandemic-affected period in 2020.

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Saudi Arabia Sees Highest Level of Non-oil Private Sector Activity in 4 Months

The 1.5-point increase in the PMI reflects a larger expansion in both output and new orders. (Asharq Al-Awsat)
The 1.5-point increase in the PMI reflects a larger expansion in both output and new orders. (Asharq Al-Awsat)
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Saudi Arabia Sees Highest Level of Non-oil Private Sector Activity in 4 Months

The 1.5-point increase in the PMI reflects a larger expansion in both output and new orders. (Asharq Al-Awsat)
The 1.5-point increase in the PMI reflects a larger expansion in both output and new orders. (Asharq Al-Awsat)

Business activity in Saudi Arabia's non-oil sector accelerated to a four-month high in September, driven by strong demand, which led to faster growth in new orders. The Riyad Bank Saudi Arabia Purchasing Managers' Index (PMI), adjusted for seasonal factors, rose to 56.3 points from 54.8 in August, marking the highest reading since May and further distancing itself from the 50.0 level that indicates growth.

The 1.5-point increase in the PMI reflects a larger expansion in both output and new orders, alongside challenges in supply. The improvement in business conditions contributed to a significant rise in employment opportunities, although difficulties in finding skilled workers led to a shortage in production capacity.

At the same time, concerns over increasing competition caused a decline in future output expectations. According to the PMI statement, inventories of production inputs remained in good condition, which encouraged some companies to reduce their purchasing efforts.

Growth was strong overall and widespread across all non-oil sectors under study. Dr. Naif Al-Ghaith, Senior Economist at Riyad Bank, said that the rise in Saudi Arabia's PMI points to a notable acceleration in the growth of the non-oil private sector, primarily driven by increased production and new orders, reflecting the sector’s expansionary activity.

Al-Ghaith added that companies responded to the rise in domestic demand, which plays a crucial role in reducing the Kingdom's reliance on oil revenues. The upward trend also indicates improved business confidence, pointing to a healthy environment for increased investment, job creation, and overall economic stability.

He emphasized that this growth in the non-oil sector is particularly important given the current context of reduced oil production and falling global oil prices. With oil revenues under pressure, the strong performance of the non-oil private sector acts as a buffer, helping mitigate the potential impact on the country's economic conditions.

Al-Ghaith continued, noting that diversifying income sources is essential to maintaining growth amid the volatility of oil markets. He explained that increased production levels not only enhance the competitiveness of Saudi companies but also encourage developments aimed at expanding the private sector's participation in the economy.

This shift, he said, provides a more stable foundation for long-term growth, making the economy less susceptible to oil price fluctuations.