Manchester United’s initial public offering
of subordinated shares on US exchange last week took full advantage of the US Jumpstart
Our Business Startups (Jobs) Act passed earlier this year. It could prompt
more foreign issuers to list in the US.
The $233.3 million offering of Class A
shares required regulatory approvals in the US and UK, but the biggest hurdle
was compliance with Section 5
of the US Securities Act.
Section 5 governs the information that must
be included in registration statements with the Securities & Exchange
Commission (SEC).
“This is a company regularly in the press,”
Marc Jaffe, a partner at Latham & Watkins who led the IPO, said. “During
the IPO process, that can be a very tricky thing. Avoiding Section 5 violations
was of paramount importance.”
Confidential filing with the SEC allowed
under the Jobs Act made it easier to comply with Section 5 because it prevented
the press from reporting on the filing process and potentially speculating on
the interplay between football and finance.
“Man U’s players and manager comment on football-related matters
every day,” Jaffe said. “It was our job to make sure that none of those things
came close to crossing the line into statements of the type required to be
included in the registration statement.”
Critics have, however, argued the Jobs Act
was designed to help emerging growth companies, and that an 134-year-old
football club should
not have qualified as such. Market participants have also noted that the
Jobs Act was designed to make it easier for small companies to raise capital
and create jobs, but the Man U IPO is unlikely to create US jobs.
The offering priced at $14 per share, below
a targeted price of $16 to $20 per share. Investment is thought to have been
hurt by a
lack of voting rights in the company – Class A shares have only one-tenth
the voting rights of Class B shares held by the Glazer family that bought the
company in 2005.
The company decided to list on the New York
Stock Exchange (NYSE) after considering exchanges in Singapore, London and Hong
Kong.
“I think it was a combination of the
liquidity of the US capital markets, the certainty of execution on the NYSE
[and] the ability to structure the company in a way that the owners and the
company desired,” Jaffe said. “They couldn’t have necessarily done that in
London or Hong Kong today.”