Aston Martin fuelled by Saudi Arabian cash
Saudi Arabia’s Public Investment Fund has injected £78m into Aston Martin and will take part in a separate £575m rights issue, making it the carmaker’s second-largest shareholder, with 17% of the shares and two seats on the board.
Aston Martin’s shares jumped by a fifth last week as investors celebrated a capital injection from Saudi Arabia. The luxury carmaker “will raise £653m via a placing and rights issue”, with Saudi Arabia’s Public Investment Fund (PIF) injecting £78m into the company and agreeing to take part in a separate £575m rights issue.
PIF will thus become Aston Martin’s second-largest shareholder, with 17% of the shares and two seats on the board. Executive chairman Lawrence Stroll argues that the deal “is needed to tackle Aston Martin’s oversized balance sheet”, with about half of the new funds put towards debt reduction, says Lex in the Financial Times. It should also give the company “more headroom to launch planned models”.
Still, all this will “not come cheap”. The Saudis will get a 25% discount for their first £78m of shares. Minority shareholders are being required to contribute £150m, a tall order given that those who invested in the initial public offering in late 2018 incurred losses of 96% . Those who refuse will be diluted by nearly 60%.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Investors should think hard before being “suckered by this road trip” again, says Alistair Osborne in the Times. While Stroll has improved operational performance, this isn’t a big deal as “the previous regime had flooded dealers’ forecourts with motors that they had to discount to shift”.
And the group is still burning cash at an alarming rate. In any case, who “wants to be a passenger in a corporate vehicle that shouldn’t be a public company”, now partly owned by “the human rights disaster that is Saudi Arabia”?
Sign up to Money Morning
Our team, led by award winning editors, is dedicated to delivering you the top news, analysis, and guides to help you manage your money, grow your investments and build wealth.
Matthew graduated from the University of Durham in 2004; he then gained an MSc, followed by a PhD at the London School of Economics.
He has previously written for a wide range of publications, including the Guardian and the Economist, and also helped to run a newsletter on terrorism. He has spent time at Lehman Brothers, Citigroup and the consultancy Lombard Street Research.
Matthew is the author of Superinvestors: Lessons from the greatest investors in history, published by Harriman House, which has been translated into several languages. His second book, Investing Explained: The Accessible Guide to Building an Investment Portfolio, is published by Kogan Page.
As senior writer, he writes the shares and politics & economics pages, as well as weekly Blowing It and Great Frauds in History columns He also writes a fortnightly reviews page and trading tips, as well as regular cover stories and multi-page investment focus features.
Follow Matthew on Twitter: @DrMatthewPartri
-
Should you buy JPMorgan's top emerging market trust?
The JPMorgan Emerging Markets Trust fund has outperformed its benchmark over the long term and offers good value
By Max King Published
-
Nationwide: UK house prices rise at fastest rate in two years
According to data from Nationwide, house prices jumped by 3.7% year-on-year last month, up from 2.4% in October
By Chris Newlands Published
-
Halifax: House price slump continues as prices slide for the sixth consecutive month
UK house prices fell again in September as buyers returned, but the slowdown was not as fast as anticipated, latest Halifax data shows. Where are house prices falling the most?
By Kalpana Fitzpatrick Published
-
Rents hit a record high - but is the opportunity for buy-to-let investors still strong?
UK rent prices have hit a record high with the average hitting over £1,200 a month says Rightmove. Are there still opportunities in buy-to-let?
By Marc Shoffman Published
-
Pension savers turn to gold investments
Investors are racing to buy gold to protect their pensions from a stock market correction and high inflation, experts say
By Ruth Emery Published
-
Where to find the best returns from student accommodation
Student accommodation can be a lucrative investment if you know where to look.
By Marc Shoffman Published
-
Best investing apps
Looking for an easy-to-use app to help you start investing, keep track of your portfolio or make trades on the go? We round up the best investing apps
By Ruth Emery Last updated
-
The world’s best bargain stocks
Searching for bargain stocks with Alec Cutler of the Orbis Global Balanced Fund, who tells Andrew Van Sickle which sectors are being overlooked.
By Andrew Van Sickle Published
-
Revealed: the cheapest cities to own a home in Britain
New research reveals the cheapest cities to own a home, taking account of mortgage payments, utility bills and council tax
By Ruth Emery Published
-
UK recession: How to protect your portfolio
As the UK recession is confirmed, we look at ways to protect your wealth.
By Henry Sandercock Last updated