Saudi Arabia's PIF invests in McLaren

Existing shareholders, including Bahrain fund Mumtalakat, and new private investors, will also invest £150m in the car maker

McLaren, which includes the Formula One team, took a hit as the coronavirus pandemic led to the cancellation of motorsport events. Courtesy McLaren

Saudi Arabia's Public Investment Fund and Ares Management Corporation are investing a total of £400 million ($550m) in McLaren Group, the car maker said on Friday.

Existing shareholders, including Bahrain fund Mumtalakat, and new private investors, will also invest a total of £150m in McLaren Group in the form of convertible preference shares. The investment will allow it to repay a loan it took in June 2020 from the National Bank of Bahrain, the company said.

"McLaren has taken a number of significant steps to put the company on a stable footing for the long-term, with the close support of its advisers and existing shareholders," said Paul Walsh, McLaren group executive chairman.

"Following the strategic investment into racing that we secured last year, this successful equity raise is a key element of our comprehensive financial strategy to support the group’s sustainable growth plans."

McLaren, which includes the Formula One team, took a hit as the coronavirus pandemic led to the cancellation of motorsport events and led to the suspension of manufacturing activities, which hurt the group's prospects. The supercar maker undertook a restructuring programme that cut 1,200 jobs, which affected the company's applied technology unit, and racing and automotive division.

McLaren secured a £300m equity injection from existing shareholders in March 2020 and completed a £170m sale and leaseback deal on its Woking, England, headquarters in April to further shore up its finances.

"We are well positioned to achieve our ambitions as a global luxury supercar and elite motorsport business, with automotive as McLaren’s core profit driver," Mr Walsh said.

"The strong appetite we have seen from investors reflects the continued confidence in McLaren’s iconic brand, industry-leading technology and exciting long-term growth prospects, underpinned by a more focused strategy and a stronger, more efficient capital structure. We look forward to working with Ares and PIF as they contribute their experience and knowledge to the board.”

The PIF, which lies at the centre of the kingdom's Vision 2030 plan that seeks to diversify the Arab world's largest economy and reduce its reliance on oil, has snapped up stakes in fast growing companies such as Uber, electric car maker Lucid Motors and cruise ship operator Carnival Corporation.

The sovereign wealth fund also increased its investments in US equities by 21 per cent to $15.4bn in the first quarter from $12.8bn at the end of last year, it said in a statement in May. The PIF more than doubled its investment in video game company Activision Blizzard and also increased its stake in game developer Electronic Arts at the end of last year.