Former Sibanye CEO's Consortium Hires Rothschild for $410m Cape Town Formula One Bid
Image by Jenda Kubeš
A consortium led by former Sibanye-Stillwater CEO Neal Froneman has hired Rothschild & Co. to help finance a R6.7bn ($410m) motorsport complex near Cape Town, targeting South Africa's first Formula One grand prix since 1993 by 2031.
The consortium
The consortium, Blue Mountain Racing, plans to build near Malmesbury in the Swartland, a wheat-farming district of the Western Cape. Froneman is joined by Srinivasan Venkatakrishnan, chair of Endeavour Mining and former chief executive of AngloGold Ashanti, Webber Wentzel partner Robert Appelbaum and businessman Bob Hartslief. The circuit itself, built to Formula One standard, accounts for about 2 billion rand (apporximately $122 million) of the budget. The remainder would go towards conference and exhibition facilities, hospitality and residential property, with the venue holding up to 125,000 spectators.
Rothschild is advising on the financing structure as the group seeks Formula One approval and courts corporate partners, Hartslief told Bloomberg. The project must also meet a government condition that the race does not rely on taxpayer money. The consortium has answered Formula One's initial technical and commercial requirements and faces an evaluation that could run for 12 to 15 months.
"Modern Formula 1 is no longer built around circuits alone," Froneman said. He argued that a purpose-built venue avoids the public costs associated with street racing, which he called unfeasible for a city like Cape Town.
23 World Championship Grands Prix
Image by Adrien Gambet
The plan was unveiled at the Swartland mayoral breakfast, attended by acting Western Cape premier Tertius Simmers and Swartland mayor Harold Cleophas. According to multiple reports, Sports minister Gayton McKenzie has said he supports the proposal, and the consortium has also approached MotoGP. South Africa staged 23 world championship grands prix, the last at Kyalami in 1993. The government-backed national bid has centred on Kyalami, which won FIA approval for a Grade 1 upgrade design, and Cabinet approved a three-year hosting bid from 2027 on condition that the private sector pays. McKenzie conceded earlier this year that 2027 would not happen. Rwanda, with a planned circuit near the new Bugesera airport, Nigeria and Morocco are also pursuing a race.
Hosting Feee & Property Development
The Swartland pitch directly addresses one of the central questions around South Africa's F1 ambitions, who pays the hosting fee. Blue Mountain Racing's proposition is that the grand prix does not have to pay for itself. Property, conferencing and hospitality are intended to generate revenue during the 51 weeks a year when Formula One is elsewhere, with the race acting as an anchor that increases the value and visibility of the wider development.
At its core, this is property development with a racetrack at its centre. The commercial plan is that the circuit creates enough demand for the surrounding real estate, hospitality and events business to support a project that would otherwise struggle to justify its scale. Hiring Rothschild is an attempt to put a bankable financing structure behind the proposal.
A greenfield circuit, a Formula One contract and a property development all have to land within five years. Residential sales and hospitality revenues will not necessarily cover a hosting fee in year one, leaving the project dependent on securing sufficient capital and long-term commercial partners. South Africa also now has two domestic venues competing for a place on a 24-race calendar. A fragmented national approach could make it harder for South Africa to present, commercially compelling proposition. The hard test is whether South Africa can offer a proposition Formula One wants to buy into, backed by private capital.
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