Singapore won the right to host Manchester United’s $1bn initial public offering earlier this month, and it is hard to imagine exchange officials are not seeing this as a major coup. They have attracted a global brand which will get unprecedented press coverage — and the odd protest — when it chooses to list.
Singapore and Hong Kong are in a war to become the regional hubs for equities, but so far Hong Kong has won almost every battle without much trouble. Could this deal could be different? Was this a listing that Hong Kong should have aggressively pitched to win?
It seems not. Yes, there could few deals with a higher profile. But Hong Kong officials should not lose too much sleep over this one.
The Glazer family, owners of the UK football team, is mooted to be selling around a 30% stake of the company in a dual share structure. This will allow the owners to retain control of the team by issuing new shares without voting rights — something that is against Hong Kong stock exchange rules. The exchange could have changed the rules to win the listing, but instead it stepped aside and let the business go to its biggest rival, which was pitching much more aggressively.
SGX officials promised to speed up the application and approval process to help Manchester United avoid any market disruptions that might affect its valuation targets, according to a banker. Perhaps the exchange should have taken more, not less, time to consider a deal which bankers think could get a lot of what they call “emotional” retail investments for die-hard fans who know little about the market.
It seems inevitable that this deal will draw a lot of retail demand. The football team has a large and loyal Asian fan base. But while the team may be one of the finest in the world, the company behind it is asking investors to buy equity in a debt-laden company without the voting power to change anything if things go wrong.
Hong Kong may regret not winning this listing, but exchange officials have shown before that protecting retail investors is one of their key concerns. They were right to let this deal go elsewhere, rather than change the rules and allow a difficult deal to jeopardise their mission.