McLaren share deal raises hopes of long-term security

The McLaren Group has announced it has achieved the long-awaited overhaul of its complex share structure in a deal with its largest shareholder, raising hopes that the company has also been given the cash to fund future models and its electric transformation to the end of the decade.

McLaren praised the so-called recapitalisation of its company, agreed with Bahrain sovereign wealth fund Mumtalakat, as “a significant step in the ongoing transformation of the group”, without giving details. The company didn’t immediately respond to requests about what it means in terms of the shareholder structure and capital injection.

The changes mean McLaren is now effectively wholly owned by the Bahraini fund, Sky News reported, citing sources. The deal was signed after the fund negotiated with minority shareholders, the report said. Mumtalakat owned 60% of McLaren as of the end of 2021.

McLaren’s automotive arm is the largest element of the company that includes the F1 race team, but has struggled to recover since Covid blew a hole in its finances. 

McLaren Automotive lost £280 million in the first three quarters of 2023, said the company in its most recent financial report. Sales to dealers were up 12% in the nine months to the end of September to 1569 units, despite a dramatic fall in the third quarter. However, revenue was down 18%, reflecting the higher mix of the cheaper Artura sports car.

The company has been reliant on support from Mumtalakat and other shareholders as it looks to steady its finances. The McLaren Group received £450 million from shareholders in 2023 to the end of November, the company said, without revealing which shareholders. 

McLaren didn’t say whether Mumtalakat had put in more money during the recapitalisation – however, CEO Michael Leiters told Autocar in August that the company was looking for “the final cash injection to fund the whole business”.

The amount needed would pay for McLaren’s business plan to the end of the decade, including launching the proposed electric SUV that’s tentatively scheduled for around 2028. 

“We have presented to the board and to the shareholders a business plan. It’s a long-term commitment from our shareholders,” said Leiters.

Recapitalisation means that the company has restructured its equity and debt, here likely to the advantage of Mumtalakat, as it decides how best to turn its ownership of McLaren into future profit. By converting different classes of shares to one single type, Mumtalakat can better hope to either attract a buyer or float the company on the stock market.

No buyer has ever been formerly linked to a takeover of McLaren but rumours have long swirled about a possible buyout by BMW or even Apple.

McLaren is expecting to deliver better results for the fourth quarter and into 2024, as deliveries of the new 750S that sits above the Artura start to come through, said the company. “750S gives us more balance and we will improve both revenue and margin,” a spokesperson for the company told analysts on the company’s third-quarter results call. He added that the company “currently has more inventory that we’d targeted to have”.