FEBRUARY 9, 2011
Analysis: Head cashes in as Williams floats
Patrick Head, co-founder of Williams Grand Prix Engineering with Sir Frank Williams, will reduce his 27% stake in the team to just over 5% as Williams prepares to float on the Frankfurt stock exchange next month in a move that should enrich head by almost $65m.
Head, 64, has said that while he expects to stand down as director of engineering in the near future, he has no immediate plans to retire completely. "I plan to remain a director and will continue to be involved with the company, for example as a director of Williams Hybrid Power," he said. "Even after the listing I will be a significant shareholder and I plan to retain that until I do retire."
Williams, with nine constructors' championships to its name, is making an Initial Public Offering (IPO) on Frankfurt's Entry Standard with the first day of trading on March 2.
"We decided some time ago that a listing would be the best way to secure the future of the team," Head said. "As we have no desire or need to raise money, that means that someone has to sell shares. I agreed to do most of that because Frank wishes to remain in control and to retain the majority of the equity. Christian Wolff (10% stakeholder) invested only 15 months ago and is also very committed to the future of the team."
In a London press conference detailing the flotation, Williams said it would offer up to 27% equity to investors. Frank Williams himself is selling a 6.4 per cent stake leaving him with 50.3 per cent and valuing the business at around $365m at $36 per share mid-point of pricing.
F1 paddock speculation has it that the float is Williams' answer to dwindling sponsorship revenue, with backers such as Royal Bank of Scotland, Philips and Air Asia all having just finished their contracts with the team and with Pastor Maldonado, backed by Venezuelan oil money, signed to replace the promising Nico Hulkenberg.
Williams chairman Adam Parr, however, said that the flotation would raise no revenue for the company, which is in any case profitable, but would provide it with a more sustainable ownership structure. Frank Williams will be 69 in April of this year. Parr added that with F1 revenues growing and and sound affiliates like Qatar-based Williams Hybrid Power, the company was a good basis for investment whether a fan of F1 or not. F1 commercial supremo Bernie Ecclestone, meanwhile, said: "If I could buy shares in the company, I would."
Williams himself added: "I want to be clear at this point that when we move ahead, I will remain as a major shareholder of this group and I will have endless energy for a long time to come to make sure that the team not only prospers but continues to do better and better on the circuits. F1 is immensely competitive and there is no time to rest, no time almost to sleep. There are some extraordinarily clever, and driven, above average competent people we have to beat - and to challenge them is quite a challenge."
Head, speaking of his own future, explained: "I passed the position of technical director to Sam Michael in 2004 and, since then, I've still been quite heavily involved in the process of designing the F1 car, in support of Sam. From what I observe, he is more than capable of flying on his own - so with Sam building it and with my support he has built a very good structure within the team.
"Equally I am 65 this year, and still a pretty healthy 65 I think. I have most of my marbles up top still and can carry on contributing. It is the case that Williams is a very strong company in the engineering sense. It always has been and it has always been an aim for Frank and myself to have it that way - and my interest is as an engineer rather than as, what Frank would call, a racer.
"I have always been driven by engineering and I am heavily involved in Williams Hybrid Power. It has its own technical people, but I am heavily involved in the support of that company. There are areas where F1 can contribute to other areas of technology, and I shall probably put my attention more to that. Meanwhile I shall keep a watching brief on the F1 side and if there is anywhere I can help, I will."
The choice of the Entry Standard of the Frankfurt Exchange rather than the more heavily regulated General Standard, will allow Williams to continue to produce accounts under the British GAAP (Generally Accepted Accounting Principles) system rather than under IFRS (International Financial Reporting Standards). The latter would, among other things, have required disclosure of the size and longevity of sponsorship contracts, matters which the team would obviously prefer to remain confidential.