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.”