How the US Jobs Act helped Man U offering

Author: | Published: 16 Aug 2012
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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.”