Saudi Arabian SWF Seeks Higher Exposure to UK Auto, Aston Martin Equities

By Mario Marroquin

In an effort to significantly deleverage its balance sheet and address liquidity constraints for future growth, U.K. auto manufacturer Aston Martin Lagonda and Saudi Arabia’s Public Investment Fund agreed to a £653 million ($775 million) equity stake program.

Under the terms of the agreement published July 15, PIF will become the second-largest shareholder in Aston Martin by receiving 23.3 million common shares at $3.97 per share. Majority shareholder the Yew Tree Consortium and shareholder Mercedez-Benz AG agreed to the equity proposal and will invest an aggregate of $305 million alongside PIF, Aston Martin reported.

A release from Aston Martin said proceeds from the equity program will enable the manufacturer to tackle the following long-term goals:

·         Front-engine sports cars and enhancements to Aston Martin’s DBX SUV offering

·         Development of high margin mid-engine vehicles

·         Build out its electric platform for sports cars and SUVs

“This is a game-changing event for Aston Martin, supporting the delivery of our strategic plans and accelerating our long-term growth potential,” Aston Martin Executive Chairman Lawrence Stroll said in a prepared statement. “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.”

Aston Martin mentioned in the same press release that its board unanimously rejected the $1.54 billion equity investment proposal from Investindustrial Group Holdings and Geely International Hong Kong Limited filed July 8.

The board of Aston Martin said it believed the proposal overestimated the company’s equity capital requirements and would have a significant dilutive effect for existing shareholders.

PIF is also a majority shareholder in California-based electric vehicle manufacturer Lucid Group. In July 2021, the $620 billion AUM sovereign wealth fund acquired an equity stake in McLaren as part of a $652 million equity stake sale.