The Takeover That Keeps on Giving

15 Aug 2013 06:12pm, by YorkshireSquare

Nothing is simple in football finance these days is it? If it’s not Bates off shore holding companies and webs of ownership it is value plays, bounces and de-consolidation. The national media are today reporting that GFH have sold half of their stake in Leeds United. This is not entirely new news, it was suggested in their half one balance sheet for 2013 and the Ups and Downs blog has given a fairly comprehensive analysis of this.

It was well known that GFH were looking for strategic partners for their investment in Leeds United. A statement in their 2012 accounts revealed ;

"The Group has an active plan to sell its stake in LUFC Holdings Limited, and accordingly, the asset and liabilities acquired were classified as held-for-sale and presented in the consolidated statement of financial position. Subsequent to the year end, the Group has commenced negotiations relating to the sale of its stake in LUFC Holdings Limited."

The same accounts also revealed that their investment in Leeds United was valued at $45.5m on their balance sheet. We know that several investments have been made in the club since those accounts were released. International Investment Bank (IIB) purchased a 10% share of the club and chairman Salah Nooruddin’s Envest Limited initially acquired a 3.33% stake in the club, now known to have increased to over 10%.

Their half one balance sheet for 2013 now reveals that GFH’s holdings in Leeds United are now valued at $22.2m suggesting they have sold over 50% of their investment in the club. The ownership statement on the club website states that there are only three investors who hold over 10% in the club; GFH, IIB and Envest Limited. This implies that either IIB or Envest have increased their shareholdings or further smaller investors have come in.

We know that Envest Limited have already increased their shareholding from 3.33% to over 10% but exactly how much of the club do they now own? The fact that Salah Nooruddin is chairman suggests they have invested heavily to me but it is likely that a large amount of the club has been sold to a large number of smaller investors. Ups and Downs advises that that the most likely scenario is that GFH has sold down a majority stake to a fund which it manages.

This fits exactly into the business model that GFH outlaid from the start. They have reduced their risk by finding strategic partners for their investment. Is it anything to worry about? I don’t think so. It’s just GFH doing exactly what they said they would, and the fact that they have found investors who are confident in their strategy can only be a good thing. It will not change anything in terms of day to day management of the club as GHF, as fund manager, will continue to run the club.

This news probably doesn’t mean a flurry of investment in the team but it shows a confidence in the plan. A confidence that GFH are on the right track to increasing the value of the investment, and hopefully an increase in the value of the investment translates as getting Leeds United back into the Premier League.

Further reading: ... rship.html