According to Sky, that China Media Capital (CMC) is leading a group of Chinese firms who want to invest roughly $1.5bn (£970m) in an offer being assembled by Stephen Ross, owner of the Miami Dolphins American football team.
Mr Ross’s consortium is understood to be planning to write in the coming days to CVC Capital Partners, F1’s controlling shareholder, to seek a 90-day period of exclusivity during which it would hold detailed talks with Bernie Ecclestone, F1’s chief executive, and undertake due diligence.
CMC is among a group of Chinese media investors – which also include Fosun and Wanda – pursuing rapid global expansion, recently unveiling a partnership with the Hollywood studio Warner Bros Entertainment to produce Chinese-language films for distribution around the world.
The proposed takeover of F1, which remains far from certain to take place, still requires roughly $2bn in additional equity from other investors.
CVC has not yet decided whether to grant the exclusivity request, insiders said.
Sky News understands that Qatar Sports Investments, which owns the Paris Saint-Germain football team and had been tipped as a partner of Mr Ross, is now on the periphery of the deal and may not participate at all.
Sources said that Mr Ross’s vehicle, RSE Ventures, plans to invest approximately $500m (£323m) to buy a significant shareholding in F1’s parent company.
Dieter Hahn, a German media magnate whose company, Constantin Medien, sued Mr Ecclestone in relation to previous changes to F1’s ownership, wants to invest a similar amount.
In addition to the Chinese investment, that would leave the consortium requiring another $2bn (£1.3bn) in equity, with the $4bn (£2.6bn) balance of the $8.5bn price tag consisting of debt.
Despite the recent legal history between Mr Ecclestone and Mr Hahn, insiders said the consortium was keen for the 84 year-old F1 chief to retain his role overseeing its racing operations, while a new commercial team would look to exploit the sport’s media and sponsorship rights more aggressively.
“They believe they can double F1’s profits,” said a source close to the bid.
The takeover proposal from the consortium which involves CMC comes at a difficult time for F1, with a number of teams succumbing to or facing financial difficulties, and lingering concerns about the quality of the sporting spectacle.
One uncertainty facing the sport is the outcome of a complaint submitted recently by two of the smaller teams – Force India and Sauber – to the European Commission about the way prize money is distributed.
Nevertheless, people close to F1 say it is now closer to a change in ownership than at any time since CVC gained control a decade ago.
The sport has been a stellar investment for CVC, which has generated huge returns from frequent dividend payments and the rise in its value since 2005.
It is unclear whether CVC would sell out of F1 altogether, with City sources speculating that Donald Mackenzie, the private equity firm’s co-founder, would like to retain a small shareholding.
In 2012, CVC sold a series of minority stakes in Delta Topco, F1’s parent, to international investors including Blackrock and Norway’s sovereign wealth fund.
Waddell & Reed, a US-based fund manager, subsequently invested another $500m to increase its shareholding to almost 21%.
That deal placed an enterprise value on the sport of $9.1bn, although insiders said that after dividend payments, it would still recoup its investment if the sport was sold with an $8.5bn price-tag.
Goldman Sachs is advising CVC on the discussions, while Mr Ross’s consortium is being advised by Raine, a New York-based merchant bank.
CMC could not be reached for comment, while CVC declined to comment.
Source: Sky News
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