Mr Bernie Ecclestone, the motor racing promoter, is preparing to sell as much as half his stake in Formula One Administration (FOA), the company that controls the sport, in a deal valued at £1.3 billion.
Morgan Grenfell Private Equity, the specialist arm of Deutsche Bank, is understood to have bought a 12.5 per cent stake in the company for £325 million. It is also believed to have secured an option to buy a further 37.5 per cent stake, valued at £975 million.
The deal is expected to be confirmed today. Morgan Grenfell, which owns a 50 per cent stake in British F1 team Arrows, is holding talks with other venture capitalists.
21 Investimenti, the private equity arm of the Benetton and Bonomi trading family, which is linked to the Benetton F1 team, is understood to be close to buying part of the 37.5 per cent stake in FOA on which Morgan Grenfell has an option.
The deal, which suggests FOA's total value is £2.6 billion, has been struck with Bambino Holdings, Mr Ecclestone's family trust which this year benefited from a £1.4 billion Eurobond issue backed by F1's television revenues. The bulk of the proceeds from the issue went into the trust.
Mr Ecclestone is keen for FOA to acquire a wide institutional shareholder base. He first tried to float his business two years ago but failed when a European Commission investigation into Formula One's television contracts frightened away potential investors.
Four months ago, that investigation led to an initial finding by the Commission that the television deals were in breach of European Union competition law.
The Commission said the promoters and organisers of F1 had abused their dominance of the sport to restrict competition and warned that if its initial findings were confirmed, the sport's television contracts would have to be renegotiated.
Although the inquiry has still not been completed, Morgan Gren fell is acquiring the stake unconditionally. It is said to be comfortable with the level of risk posed by the investigation and believes that even on a worst-case scenario, the holding represents an attractive investment.
This year, FOA is expected to earn a profit of about £200 million on revenues of £400 million, most of which come from the sale of television rights.
