Formula 1 closes in on America after investment in US Grand Prix
The New York-listed fund manager which owns the second-largest stake in Formula One has invested in Circuit of the Americas, the Texas race track which is home to the United States Grand Prix.
The move by Waddell & Reed gives F1 closer links to the United States where it is trying to break into the market. Gaining a foothold there is understood to be an important part of revving up the stalled plans to float F1 on the Singapore stock exchange.
Television coverage of F1 moved this year to the sports division of NBC, the oldest major broadcast network in the US, and the US Grand Prix returned to the calendar in 2012 after a five-year hiatus. Further races in New Jersey and California are under consideration.
Circuit of the Americas was built bespoke for F1. The 3.4 mile track in Austin, the capital of Texas, cost a reported $300m to build and held its first F1 race in November. Its owners include hedge fund manager Bobby Epstein, Billy Joe 'Red' McCombs, who co-founded advertising company Clear Channel, and John Paul DeJoria, a billionaire investor in high-end tequila company, Patr¢n Spirits.
The circuit was part-funded with a $90m loan which was taken out in February last year by its parent company Circuit of the Americas LLC. According to recently-filed documents, Waddell & Reed provided $11.8m of the debt which is due for repayment between 2017 and 2018.
Last year Waddell & Reed paid $1.6bn for a 20.9pc stake in F1's parent company Delta Topco. The transaction with Circuit of the Americas brings Waddell & Reed's F1-related investments to 7.6pc of its net assets. It is a higher amount than that for any of its other investments except for gold bullion which accounts for 9pc of Waddell & Reed's net assets.
Waddell & Reed is based in Kansas and is listed on the New York Stock Exchange. It has $90bn in assets under management and, aside from F1, its investments typically focus on traditional American brands such as Apple, Pepsi and casino company Wynn.
The debt provided to Circuit of the Americas isn't the only loan between F1 and a US race track. In April F1 also opened up a credit facility with the group which is planning to host the New Jersey Grand Prix. The loan is personally guaranteed by the boss of the project Leo Hindery junior, the managing partner of private equity fund InterMedia Partners.
New Jersey's Grand Prix of America was due to take place this year but was postponed after it missed payment deadlines. The loan from F1 has allowed the project to progress and investment bank UBS has been engaged to raise $100m which is required in order for it to go ahead next year. Telegraph