Saudi wealth fund to become Aston Martin’s second-largest shareholder

Aston Martin's shares jumped 20% on Friday after the British luxury carmaker announced a capital raising that will see Saudi Arabia’s Public Investment Fund (PIF) become its second-largest shareholder with an almost 17% stake.

PIF’s £78m (R1.6bn) investment, together with a £575m (R11.7bn) rights issue, will allow the 109-year-old company to lower its debt and invest in new models.

PIF will own a 16.7% stake in Aston Martin and will be entitled to two board seats, behind the 18.3% holding chairman Lawrence Stroll's Yew Tree will have after the rights issue.

The sovereign wealth fund, which owns stakes in electric carmaker Lucid Motors and British supercar group McLaren has been diversifying its oil-rich investment portfolio.

For Aston Martin, the preferred ride of fictional secret agent James Bond which has gone bankrupt seven times in its history, the investment means it can secure its long-term future.

Its current second-largest shareholder, German carmaker Mercedes-Benz will own about 9.7% after the capital raising.

“In 2020, I inherited a business in deep trouble that needed to be reset,” Stroll told reporters.

Covid-19 lockdowns and the disruption to global supply chains has slowed the company’s recovery, he added.

Half of the new capital will be used to repay debt that stood at £957m (R19.4bn) at the end of March.

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

The carmaker said former owner Italian investment group Investindustrial and China's Geely had proposed up to £1.3bn (R26.4bn) in funds last week, which the board rejected.

The pair would have injected £203m (R4.1bn) for a stake, making them the largest shareholder.

Stroll said the proposal would have been highly dilutive to shareholders and believed it was a takeover offer in disguise.

Reuters