McLaren Group Navigates Financial Waters as Bahrain Wealth Fund Mulls Share Sale

In a significant shift in the motorsport landscape, Bahrain’s sovereign wealth fund, Mumtalakat, is reportedly exploring the sale of its shares in McLaren Group. This move reflects the fund’s strategic redirection in response to ongoing financial challenges faced by McLaren.

Key Takeaways:

• Bahrain’s sovereign wealth fund, Mumtalakat, is deliberating the sale of its McLaren Group stake amid financial uncertainties.
• Aiming to secure a strategic partnership focusing on electric vehicle technology, Mumtalakat enlists JP Morgan for the sale process.
• Mumtalakat’s deep financial commitment to McLaren, totaling £1.5 billion in recent years, demonstrates its significant role in the group’s stability and growth prospects.

In an unprecedented move, Mumtalakat, the Bahraini sovereign wealth fund, is considering offloading its shareholding in the McLaren Group. This consideration arises amidst McLaren’s financial predicaments exacerbated by the COVID-19 pandemic and other economic setbacks. The decision aligns with the economic strategies outlined by Bahrain’s King Hamad bin Isa Al Khalifa.

Mumtalakat’s financial journey with McLaren features several key support instances. Notably, in 2020, a £300 million emergency funding was injected to mitigate the financial strains of the pandemic. This move was followed by an ambitious £1 billion capital boost in 2021. The strategy included various initiatives such as the sale-and-leaseback of McLaren’s headquarters, offloading a part of its heritage car collection, and forming a joint venture with the Saudi Arabian sovereign wealth fund.

Furthermore, Mumtalakat consolidated its position in McLaren through acquiring shares and warrants worth £400 million from entities like the Saudi Arabian Public Investment Fund and Ares Management. However, McLaren’s escalating financial losses, which surged to £349 million in 2022, have compelled Mumtalakat to reassess its involvement.

Engaging JP Morgan, Mumtalakat aims to find a potential buyer, reflecting its commitment of over £1.5 billion in the past four years. The focus is on a ‘strategic partner’ specializing in electric vehicle technology, aligning with McLaren’s move towards electrification. The partnership could initially involve a minority stake, allowing Mumtalakat to maintain some interest in McLaren.

Currently, these discussions are at a preliminary stage, with a broad range of options under consideration. The search for potential partners isn’t limited to the automotive industry, and the final arrangement might not involve an equity exchange. This development marks a pivotal moment for McLaren, indicating significant changes in its ownership and strategic direction.