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Waddell & Reed increases stake in Formula One

GP Week
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Bernie Ecclestone with CVC Capital Partners in Monaco last month © Sutton Images

CVC Capital Partners has nearly halved its stake in Formula One over the course of the year, thanks to investment firm Waddell & Reed picking up another $500 million stake in the business over the weekend, increasing their aggregate stake to 20.9%.

CVC had a 63% stake in Formula One, but this latest news, which follows on from May's $1.6 billion deal with Waddell & Reed, BlackRock, and Norway's Norges Bank Investment Management, sees the private equity firm's total share in the business reduced to 35%.

According to the financial analysts at Reuters, this latest deal with Waddell & Reed will reduce the pressure on CVC to get F1 listed on the Singapore stock market. The Formula One IPO expected to take place this summer was delayed two weeks ago following concerns about stability in the markets; as yet there is no news concerning a revised schedule for the flotation.

With a 21% stake in the business, Waddell & Reed are now part owners of Formula One. The investment management firm, which is based in Kansas, is itself a publicly traded company. One of the core elements of their business is retirement planning and pension packages. As such, many of their investments are businesses with long-term growth potential. The fact that Waddell & Reed have decided to acquire a sizeable stake in Formula One speaks volumes about their confidence in the future viability of the sport.

The timing of the purchase, which coincides with F1's long overdue return to America, is also very telling .