Yesterday Force India announced the sale of 42.5% of the team to the Sahara group. Dr Vijay Mallya retains 42.5% while Michel Moi keeps 15 % of the remaining shares. This would mean Dr Vijay Mallya has given up 7.5% of his shares while Moi’s family has given up 35% of theirs. The whole deal is valued at $100 million which is offloading equity for more than double the price it was purchased. In Sep 2007 the old Spyker F1 team became Force India F1 (FIF1), the deal then was rumoured to be around $80 million.
Dr Vijay Mallya vehemently denied reports in the media about a possible sale 5 days ago, his statement was cleverly worded in which he said “As Team Principal, I will continue to run the team and I have no plans whatsoever to exit.” He continues to remain Team Principal while Subrata Roy becomes Chairman of the team. It’s a wonderful opportunity for Sahara to continue making new inroads with it’s branding effort. It already has high brand recall and visibility being associated with sports in India, cricket being the biggest and with Formula 1 it gets to create a new identity in luring the motor racing fan and in creating a new fan base for the sport in the country.
Its well known that the aviation business of the UB group is in a crisis with the airline defaulting on many payments and looking for cash infusion to keep them afloat. The partial sale of equity in the formula 1 team could be part of a long term plan for the group in finding a honourable exit from the extremely cash hungry sport. It’s also a clear indication of the Moi family’s intentions, from being 50:50 partner to retaining just 15% stake.
The media in India has been more than glowing in its coverage of the Force India F1 team, probably because of the UB groups big advertisement budget and Dr Vijay Mallya’s cloud. In the past I’ve pointed out how the Force India F1 team wasn’t “indian” at all. Atleast that part changes a wee bit with the Sahara group’s entry. The media hasn’t bothered to question Dr Vijay Mallya when he loudly claims he brought the race to India. They won’t ask him how his team is Indian at all except for all the Kingfisher models who show up in the paddock on race weekends. Let’s hope more engineers, technicians and eventually at least one Indian driver gets to drive a Sahara Force India Formula 1 car. Until then … let’s wait and watch.
