Aston Martin to raise £653mn as Saudi Arabia becomes major shareholder

Aston Martin will raise £653mn in fresh investment by bringing in Saudi Arabia as a major shareholder and launching a rights issue after rejecting an offer handing control of the luxury carmaker to China’s Geely and its former owner Investindustrial.

Saudi Arabia’s sovereign wealth fund the Public Investment Fund will take a 16.7 per cent shareholding via a £78mn equity placing, giving it two board seats.

The announcement propelled shares 12 per cent higher to 414.62p in early morning trading in London.

Aston will also launch a £575mn rights issue, with PIF, major shareholder Mercedes-Benz, and owner Lawrence Stroll’s Yew Tree consortium all agreeing to take up their rights.

In total, Yew Tree, Mercedes and PIF will invest £335mn through the rights issue or the fresh shares, Aston said. This leaves other investors to pay up to £318mn through the rights issue, which has been fully underwritten.

About half of the money will be used to pay down debt, which stood at £957mn at the end of March.

Stroll told the Financial Times the fundraising was important to “deal with the God-damned debt”.

He stressed the business “did not need to raise money to execute the business plan,” but admitted fears over debt levels had weighed down the share price.

The cash gives the company an “extra money cushion”, he added.

Aston also rejected a rival £1.3bn investment proposal from China’s Geely and the carmaker’s former owner, the Italian investment group Investindustrial, it said on Friday.

Aston said the proposal was “an attempt by the Atlas Consortium [Geely and Investindustrial] to acquire a controlling and prospectively majority ownership position without any premium paid to existing shareholders”.

The pair would have injected £203mn for fresh equity, making them the largest shareholder, although sitting below the 30 per cent threshold at which they would be forced to launch a formal takeover.

Their proposal, received by Aston Martin last week, also included a £1.1bn rights issue.

Aston rejected the proposal. It said it did “not believe that the proposal presented an attractive funding option or value creation opportunity for existing shareholders”. There is “no need for further discussions,” it added.

Geely tried to invest in the company three years ago, when owner Stroll came into the business. The Chinese carmaker’s 2019 approach was backed by Investindustrial, which at the time was a significant Aston investor.

Aston also said on Friday that car sales in the first half were lower than expected. It sold 2,676 vehicles in the first six months of the year, although it is still aiming to produce 6,600 this year in total.

The company also pushed back the date at which it will start producing cash from 2023 to 2024.