Britain’s Aston Martin said Friday it is looking to raise 653 million pounds ($772 million) from the Saudi sovereign wealth fund (PIF) and existing shareholders in a bid to reduce debt and free up funds for future product development.
The luxury carmaker said the PIF and its largest shareholders, the U-Tree Consortium and Mercedes-Benz, are jointly investing 335 million pounds. The financing includes a separate rights issue of EGP 575 million.
The car maker intends to issue 23.3 million new shares to PIF at 3.35 pounds per share, giving it a 16.7 percent stake, according to the company’s statement, putting it second only to U Tree Consortium chairman Lawrence Stroll, who owns 18.3 percent.
In contrast, Mercedes-Benz, which owns about 11.7 percent of its stake, will reduce it to about 9.7 percent with this announcement.
According to the agreement, the PIF will also have the right, provided it holds more than 7 percent of the company’s voting rights, to the position of a non-executive director as a representative of shareholders on the Aston Martin Board of Directors, and the right to the position of a second non-executive board member provided that the fund owns than 10 percent of the company’s voting rights.
Goldman Sachs served as a financial advisor to the PIF.
The company said it will use up to half of the proceeds to pay off existing debt, enhance financial flexibility and improve cash flow generation by lowering interest costs.
The rest will be used to maintain significant liquidity.
Aston Martin challenges
Aston Martin faces the challenge of financing its next generation of sports cars and switching to electric vehicles, as debts weigh on the company, which is unable to generate net cash flow.
The group had a net debt of 957 million pounds as of the end of March, and it is expected to pay around 130 million pounds of interest on debt this year. It should be noted that its sales are lower than they were two years ago.
Aston Martin has suffered since it went public in London four years ago. The automaker was forced in 2020 to seek a bailout by Canadian billionaire Lawrence Stroll, who poured in money and forged closer ties with Mercedes-Benz.
Lawrence Stroll: We have a common vision with the fund
“Today’s announcement represents the latest success in the evolution of Aston Martin, restoring the business and balance sheet we have inherited, and accelerating long-term growth potential,” said CEO Lawrence Stroll.
“I am delighted to welcome the Public Investment Fund as a new major shareholder in the company, along with my consortium. Our shared vision and our joint participation in this important strategic funding demonstrates our confidence in the company’s prospects and our commitment to Aston Martin’s future success,” said Stroll.
“Overall, this is a game-changing event for Aston Martin, supporting the delivery of our strategic plans and accelerating our long-term growth potential,” he added.
The Fund and the future of the automotive and transportation sector
The Public Investment Fund is betting on the future of the automotive and transportation sector, as it owns about 60% of the shares of the “Lucid” group, after it acquired a share of it when it was a private company, and then supported its listing on the stock exchange by merging with a private company for the purpose of acquisition. The fund, along with funds managed by Aris Management, has also committed to investing 400 million pounds ($550 million) in McLaren. It also invested $3.5 billion in Uber.
