Wanda Sports Group follows Endeavor by filing for US IPO
Dalian Wanda, the China-based multinational conglomerate, has, as expected, filed for an initial public offering in USA for its Wanda Sports Group subsidiary, which owns the Infront sports agency and Ironman long-distance triathlon brand, among other sports assets.
The aim of the IPO is reported to be to raise funds to pay down debt. The IPO mirrors one announced last month by Endeavor, the former Hollywood talent agency that has developed into a global entertainment, sport and content company since its acquisition of IMG, the international sports and entertainment company.
In that case too, servicing debt is one of the stated aims of the IPO.
Wanda said that it aims to raise about $500 million, coincidentally the same amount that Endeavor is said to be seeking, albeit that amount is likely to be subject to change.
Wanda Sports claimed revenue of $1.29 billion in 2018, a 15-per-cent rise on the previous year, but profits were down 31 per cent to $62 million, according to the IPO documents. The group has been under Chinese government pressure to reduce overseas deals and high leverage.
Wanda Sports was formed on the back of the €1.05-billion ($1.21-billion) acquisition of Infront at the start of 2015, and also houses Wanda’s $650-million investment in the World Triathlon Corporation, owner and organiser of Ironman races.
Also included are smaller Chinese sport assets such as cycling and basketball leagues.
The government-led crackdown on overseas deals and high leverage has forced major companies like Wanda to reconsider their investment portfolios. Over the past year, Wanda has been offloading domestic and overseas holdings, including stakes in cinema operator AMC Entertainment and Spanish soccer club Atlético Madrid and a handful of property developments.
Last February, Wanda sold its 17-per-cent stake in Atlético to Quantum Pacific Group, the shipping and energy conglomerate, in a deal worth about €50 million.
Wanda now plans to spend millions of dollars to promote soccer in its homeland, including plans to invest 2 billion yuan ($297 million) to build 23 soccer fields and training facilities in the north-eastern city of Dalian.
Wanda, whose chairman is Wang Jianlin (pictured), said in a statement on its website last month that the amenities will be able to accommodate as many as 600 players and coaches and will start in December.
In March, Infront, the Switzerland-based international sports marketing company owned by Wanda, was revealed as “the preferred commercial partner” behind World Rugby’s highly controversial proposed new Nations Championship.
World Rugby, rugby union’s international governing body, said that the new Nations Championship would be “underpinned by a record commercial partnership” with Infront, “guaranteeing almost £5 billion [$6.6 billion] for investment in the sport over an initial 12-year period (of which more than £1.5 billion is guaranteed incremental revenue for the world game).”
It added: “The proposed business model covers both media and marketing rights but does not include any sale of equity in the competition and therefore full control of the competition and its revenue redistribution model would be retained by the unions, the current major competitions and World Rugby.”
Since then, World Rugby is reported to have increased the value of its offer by $1.26 billion to $7.8 billion, as it bids to persuade the world’s rugby unions to turn their backs on various competing offers.
Endeavor, which is listing on the New York Stock Exchange, reported a profit of $231 million on $3.6 billion in revenue for 2018.
The company recorded sales growth of about 20 per cent, having lost $173.2 million the previous year. However, it again reported a net loss of $152.6 million in the first three months of 2019 and its cash on hand fell below $500 million. It said that it could use some of the funds raised to pay off part of its $4.6 billion of debts or to acquire other assets.
For a Sportcal Insight analysis of the Endeavor IPO, click here.