A guide to McLaren Group: will McLaren IPO in 2021?
Rebecca Cattlin April 29, 2021 2:45 PM
As the buzz around a potential McLaren IPO increases, take a look through our guide to the motor company and what you should know about its balance sheet.
McLaren Group: an overview
McLaren is a British car manufacturer that was founded in 1981 after Ron Dennis acquired the McLaren Formula 1 team. The company is considered an innovator in the world of Formula 1 racing, having won 20 World Championships and over 180 races.
While racing is very much still the businesses focus, it has built a methodology based on developing the fields of science and technology.
McLaren Group is the umbrella company for McLaren Racing, McLaren Automotive and McLaren Applied. Each subsidiary is a company in its own right, with different investors, directors and aims.
McLaren Racing is the arm of the company dedicated to winning Grand Prix and World Championships. The business is focused on designing, building and operating race cars.
This was the original company that Bruce McLaren founded, which was later spun off into the other two subsidiaries as it expanded.
McLaren Automotive designs and assembles high-performance sportscars and supercars for the retail market. It was set up in 2010 and is now the largest part of the McLaren group.
McLaren Applied is the division focused on technology and data advancements. It’s not just an automotive business but looks at ways to improve performance across industries. It aims to apply the company’s experience and skills in engineering to other areas of everyday life such as health and public transport.
The company has expanded into new territories including London, Singapore and locations across North America.
How does McLaren make money?
McLaren makes most of its money through McLaren Automotive sales. The company’s product portfolio of GT, Supercar, Motorsport and Ultimate models are retailed through almost 100 retailers in 40 markets around the world. Combined, these lines provided McLaren with retail sales of 1640 cars.
McLaren also makes money through winning F1 competitions and sponsorships – although the F1 business is largely supported by the revenues of the other two subsidiaries.
Every team that classifies for a race receives approximately $35 million each, depending on the position they finished in the previous year. Teams are also paid as a part of the constructor’s championship bonus, as well as through other bonuses and prizes.
Sponsorship is another huge way to make money for F1 teams. In 2020, McLaren confirmed a multi-year partnership with Belarusian company Miory Steel.
What is McLaren’s business strategy?
McLaren’s business plan is based on research and development into new cars and technologies that will increase its market share throughout all arms of the business. It announced in 2018 that its Track25 business plan will see it invest £1.2 billion into delivering 18 new cars or derivatives by the end of 2025.
Right now, the company’s business strategy remains focused on the internal combustion engine vehicles. McLaren unit sales are expected to reach 2,000 vehicles in 2025.
However, the automaker is making progress on a hybrid models, revealing the McLaren Artura in February 2021, after spending close to £400 million on a hybrid system. It expects half of its line-up to go hybrid by 2025 and will eventually aim to hybridise its entire suite of cars.
As we know, the Group is also committed to advancing technologies. McLaren Applied is currently in the process of developing electric motors to cut fuel consumption in urban areas – the same motor will soon power all of the company’s Formula E cars.
CEO of McLaren Automotive Mike Flewitt has previously said that the all-electric model does not currently work in the realm of supercars. But with the growth in the electric car industry, this view has been critiqued as short sighted.
McLaren works with other product development companies – including the pharmaceutical giant GlaxoSmithKline and Deloitte.
McLaren market share
McLaren is in a fairly saturated market. The global luxury car market was valued at $495.65 billion in 2018 and is projected to reach $733.15 billion by 2026. In a lot of rankings, McLaren doesn’t even fit into the top ten companies, which are dominated by competitors such as Volkswagen AG, Daimler AG, Lexus, Infiniti, BMW AG, Volvo Car, Rolls-Royce plc, Aston Martin Lagonda, Tesla, and Ferrari N.V.
Is McLaren profitable?
McLaren is not currently profitable. The company saw pre-tax losses increase to £312.9 million in 2020 as the coronavirus pandemic caused sales fall by more than 60% to £389.2 million.
McLaren Group revenues for 2020 were £772.8 million, down 48% against 2019 as a result of COVID-19. The firm was forced to lay off a quarter of its staff and seek £150 million in emergency funding over summer 2020 in order to cut its debt.
McLaren Automotive accounts for 80% of the Group’s revenue, while Racing and Applied make up 16% and 4% respectively.
Going forward, McLaren’s revenue is expected to show an annual growth rate of 10.31%, resulting in a projected market volume of £253.3 million by 2025.
How much is McLaren worth?
McLaren Racing was most recently valued at £560 million after US sports investment group MSP Sports Capital acquired a minority shareholding in December 2020. The deal would help drive McLaren’s growth by injecting a total of £185 million into the racing division – but more importantly bring extra funding to the company following its sale decline in 2020.
MSP would acquire an initial 15% – alongside its strategic partners UBS O’Connor, LLC and The Najafi Companies – which would later increase to 33%.
Who owns McLaren?
The McLaren Group was initially owned by Ron Dennis after his acquisition of the McLaren Formula 1 team. The current owners of the McLaren group are:
- Mumtalakat Holding Company 56.4%
- TAG Group Limited (Mansour Ojjeh) 14.32%
- Nidala (BVI) Limited (Michael Latifi) 9.84%
- Favorita Limited 5.78%
- Perlman Investments Limited 5.77%
- McKal Holdings Ltd 5.24%
- Acanitt Limited 2.65%
Directors of McLaren
The Managing Directors of McLaren group are:
- Paul Walsh, Group Executive Chairman
- Kate Ferry, Group Chief Financial Officer
- Zak Brown, Chief Executive Officer of McLaren Racing
- Mike Flewitt, Chief Executive Officer of McLaren Automotive
- Anthony Murray, Chief Executive Officer of McLaren Applied
- Tim Murnane, Group Legal Director
- Jonathan Neale, Group Chief Operating Officer
- Chris Hicks, Group Chief Information Officer
Each subsidiary within McLaren Group has its own directors.
Who is Bruce McLaren?
Bruce McLaren was a New Zealand born racer, car designer and inventor. After an already successful racing career, Bruce founded McLaren Racing in 1966 with his partner Teddy Mayer.
This not only ushered in an era of Bruce McLaren as a businessman but saw him win the 1968 Grand Prix in his very own race car – the manufacturer’s first F1 car, the M2B.
Bruce remained a driver until his death in 1970 at the age of 33 when his car crashed on the Goodwood Circuit in England.
Can you trade the McLaren share price?
Currently no. None of the McLaren Group is publicly traded, although that could be set to change as the company could be listing. An IPO would put McLaren shares alongside the likes of Aston Martin and Ferrari as publicly-traded supercar manufacturers.
When is the McLaren IPO?
McLaren is rumoured to be considering a listing at some point in 2021. It would be listing via a deal with a special purpose acquisition company (SPAC) – an increasingly popular way of going public that requires less preparation and is subject to less regulation.
The listing would be in a bid to raise capital – as much as £500 million – as the company did not have the liquidity to survive the Covid-19 pandemic. According to the Financial Times, the company has been in talks with at least one SPAC.
There is still no guarantee that the McLaren IPO will even happen, however the possibility is definitely one that has captivated both investors and sports enthusiasts alike.
How to buy McLaren shares
When McLaren lists, you’ll be able to trade its shares in the same way you would any other publicly-traded company on the stock market.
In the meantime, you can trade stocks with FOREX.com from just 1pt in four steps:
- Open a FOREX.com account, or log in if you’re already a customer
- Search for the company you want to trade in our award-winning platform
- Choose your position and size, and your stop and limit levels
- Place the trade
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.