UK’s Aston Martin to raise 653m pounds, Saudi’s PIF to own 16.7% stake

Aston Martin said on Friday it was looking to raise 653 million pounds ($771.58 million) through a right issue to shareholders, while bringing in Saudi Arabia’s sovereign wealth fund as its second-largest shareholder.

The luxury carmaker said Saudi’s PIF, largest shareholder Yew Tree Consortium and Mercedes-Benz AG will together invest 335 million pounds. The financing will involve a separate rights issue of 575 million pounds.

PIF will own 16.7 per cent stake in Aston Martin, behind the 18.3 per cent holding by Chairman Lawrence Stroll’s Yew Tree. Mercedes, which owns about an 11.7 per cent stake, will cut its stake to about 9.7 per cent with the announcement.

Last month, the Financial Times reported that PIF, which has a stake in electric carmaker Lucid and British supercar group McLaren, was in early talks with Aston Martin for a share of the business.

Aston Martin said it will use the proceeds from the capital raised to repay debt, “strengthening financial resilience and improving the company’s cash flow generation by reducing its interest costs”.

According to the agreement between Aston Martin and PIF, the latter will also have the right, subject to owning more than 7 per cent of the company’s voting rights, to a non-executive director seat as a shareholder representative on the Aston Martin board, and the right to a second non-executive director seat provided that PIF owns more than 10 per cent of the Company’s voting rights.

Goldman Sachs International acted as the sole financial adviser to PIF.

“I am delighted to welcome the Public Investment Fund as a new anchor shareholder in the company, alongside my consortium. We have a shared vision and our joint participation in this important strategic financing demonstrates both our confidence in the prospects for the company and our commitment to the future success of Aston Martin,” said Lawrence Stroll, Executive Chairman of the board.

“Overall, this is a game changing event for Aston Martin, supporting the delivery of our strategic plans and accelerating our long-term growth potential. It transforms our balance sheet, liquidity and cashflow profile and provides greater clarity on our pathway to become sustainably free cash flow positive and create significant shareholder value. With the new leadership team in place…we have the right team and the right strategy to fully realise the long-term potential of Aston Martin.”

With inputs from Reuters