Manchester United’s Singapore IPO to Be Two-Tier

Manchester United football club’s $1 billion initial public offering in Singapore will use a two-tier share structure that will minimise the influence of outside shareholders over the US-based Glazer family.

Manchester United IPO
Ian Walton | Getty Images
Manchester United IPO

The ability to use a dual share structure, in which some shares have more voting rights than others, was an important reason for the club’s decision to switch the IPO from Hong Kong to Singapore, according to people with knowledge of the transaction.

“There will be a dual share structure because that makes most sense for the business. The club could not have done that in Hong Kong and it is an important reason why they chose Singapore. But it is not the main reason,” one of the people said.

The disclosure of the proposed dual share structure will trigger fresh debate about the corporate governance standards at the club under the Glazers, since two-tier shareholding structures are often regarded as inequitable.

However, the club will on Thursday announce strong financial results for the year to the end of June, with record turnover of more than £300 million ($489 million) and record operating profit of more than £100 million, which would leave a substantial net profit after repayments of about £45 million a year on gross debts of £515 million.

The results will fire the starting gun for the IPO, which is expected to take place in mid- to late October.

The dual shareholding structure, under which investors usually hold either ordinary shares with full voting rights or non-voting preference shares, is understood to have been a key concern for the Glazer family, which acquired Manchester United for £790 million in 2005.

One expert, who follows the club’s finances closely and asked not to be named, said the decision was odd: “If they are going to do a dual structure, it would be less likely that someone would invest in it. I can’t imagine why anybody is going to go choosing some illiquid and very expensive stock with very little beyond being a trophy.”

The people close to the transaction said it was modelled on U.S. sports where top teams are required to have a single designated owner to ensure stability and quick decision-making.

The banks marketing the IPO, led by Credit Suisse, are also expected to argue that having a single owner has been good for Manchester United in spite of the club’s debt burden. Thursday’s results will show that operating profit under the Glazers has more than doubled from £43 million.