McLaren's Formula One future was never a doubt, says team principal

McLaren's Formula One future was never in doubt despite a cash crisis brought on by the Covid-19 pandemic and now resolved by a fresh injection of funds, team principal Andreas Seidl said.

The National Bank of Bahrain announced on Monday a £150 million (Dh679m) financing facility for the McLaren Group, which includes the team and supercar manufacturer.

Bahrain's sovereign wealth fund Mumtalakat Holding Co is McLaren's majority shareholder.

"It was a tough period for the team, steering a team through these financial difficulties we were in," Seidl told reporters on a Zoom call.

"The positive news we had yesterday about the funding which is in place now, is I think an extra boost, an extra motivation for all of us who are fully focused again on what we like to do most and what we do best."

McLaren were the first team to furlough staff, with drivers Lando Norris and Carlos Sainz also taking pay cuts, and have had to implement redundancies - a move that also reflects Formula One's 2021 budget cap.

"With me and [McLaren Racing chief executive] Zak [Brown] having detailed knowledge of what was actually going on ... there was never a doubt of McLaren not being on the grid next year," said Seidl.

The financial issues had not affected this season, he added, with regular performance upgrades planned.

While some infrastructure projects had been put on hold, Seidl said he was pushing to get them going again although McLaren still had to be cautious due to uncertainty over how many races there would be and the impact on revenues.

The German suggested some headlines that triggered alarm, with talk of mortgaging assets or selling a minority stake in the team, reflected McLaren's search for the best possible option in terms of funding.

"[It was] finding the right funding which would not only get us through this crisis but also put us in the best possible position to be competitive in the future. So I am very happy with the news from yesterday," he said.

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Ranked: the 20 drivers on the F1 grid

Monday's results

UAE beat Bahrain by 51 runs
Qatar beat Maldives by 44 runs
Saudi Arabia beat Kuwait by seven wickets

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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”