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Saudi Arabia's sovereign wealth fund takes 16.75% stake in Aston Martin

NEWS STORY
16/07/2022

78m ($92m) investment sees Saudi Arabia's Public Investment Fund (PIF) become Aston Martin's second largest shareholder.

The Saudi money, together with a 575m ($682m) rights issue, is intended to lower the company's debt whilst providing it with a "war chest" amidst a "challenging operating environment", whilst also allowing it to develop new cars.

PIF, which is controlled by Crown Prince Mohammed bin Salman, and last year took over Newcastle United football club, has invested in a wide range of companies, not least Boeing, Facebook, Uber, Disney and even a 5.7% stake (valued at $500 million) in Live Nation, the entertainment company 36.2% owned by Liberty Media.

The move, which saw a 1.3bn proposal from Italian investment group Investindustrial and Chinese car manufacturer Geely rejected, will see Lawrence Stroll's stake in Aston Martin reduced to 18.3% and Mercedes-Benz's to 9.7%.

"This is a game-changing event for Aston Martin," said Stroll, "supporting the delivery of our strategic plans and accelerating our long-term growth potential."

Indeed, news of the move saw shares rise 23.7 per cent.

"In 2020, I inherited a business in deep trouble that needed to be reset," said Stroll, who claimed that the Investindustrial/Geely proposal, other than being a potential takeover, would have been highly dilutive to shareholders.

Revealing that around half of the new capital will be used to repay outstanding debts of 957m - as at the end of March - Stroll admitted that the date at which the company will start producing cash has been delayed until 2024 as opposed to 2023.

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READERS COMMENTS

 

1. Posted by trackrecords, 30/07/2022 10:16

"@Bill Hopgood The problem with Jaguar being that it wasn't a team, instead but a collection of factions - powertrain/gearbox/suspension/aero/chassis build/electronics - that resented each other. They didn't work together, instead blaming the others when and for things failing. There was no co-operation at all - it mirrored the worst of British Leyland in the 70s. The stream of - non UK national - bosses sent to sort it out did not succeed because they couldn't comprehend what was happening."

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2. Posted by kenji, 19/07/2022 23:13

"Income less expenditure equal + or - over time. Great product"

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3. Posted by Bill Hopgood, 19/07/2022 19:32

"One way for Stroll and Co to over time get themselves out of this "investment".

I don't quite know why but AML and entities never seem to make money.

Even in David Brown's day they couldn't manage it. Ford couldn't either. Merc are also pulling back a bit.

The AML road cars look nice, sound nice and they have that "image" of James Bond lore too so should be top sellers in their market.

As for the F1 team, it kind of reminds me of Jaguar back in 2000 after taking over Stewart (a small team doing OK but knowing that huge money is needed to stay in F1 let alone compete, being taken over with more money (Ford) and slowly dwindling performance until the cycle is rinsed and repeated, Red Bull coming in with not only the money but the people too).

Perhaps the Saudi money will help but then again I think it will come down to the people. The Bahrain fund has pumped a lot of cash into McLaren so that team has survived however decent results look to be some time off."

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4. Posted by BrightonCorgi, 19/07/2022 15:06

"@didaho - I wonder if the Saudi's are happy with Stroll's direction and executive leadership to date? Aramco is a title sponsor of the AMF1 team, so they quite into Aston Martin.

Who do you think they would want as chairman if not Stroll? Felisa seems a bit too old and particular for the sudden appointment. There are stalk of major ownership changes (from AMOC gatherings) happening at AML within the next 6 months. Saudi's buy in could be the first sign of this."

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5. Posted by Spindoctor, 19/07/2022 10:27

"@BrightonCorgi
In case you hadn't noticed, in addition to promoting the extremist wahhabi version of Islam, MSB wants to be a "player" on the World Stage.
Unlike Putin - who controls not only Oil & Gas, but also nuclear weapons and gives not a fig for reputation, MSB wants to gain "respect" & respectability. Sponsoring various Sports gives an illusion of this respectability."

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6. Posted by didaho, 19/07/2022 3:11

"Larry stake (along with proxies/allies) is still large enough for effective control I imagine."

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7. Posted by BrightonCorgi, 18/07/2022 19:09

"@Spindoctor, Why do you think MBS cares about washing his image? Where is it stated he hopes to do so?

Image is pretty far down his list of concerns. He is the ruler of a kingdom and need not impress anyone. "

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8. Posted by BrightonCorgi, 18/07/2022 11:44

"Saudi's have long been investors in AML and it doesn't surprise me they are re-investing at the attractive stock price AML is trading at. They've supported the marque for decades now.

I hope they continue to invest.

If only AML could build a car for a profit would be great. "

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9. Posted by Spindoctor, 17/07/2022 15:29

"Although it's pretty obvious why MBS is splashing the cash to fund various sporting efforts I'm unconvinced that it will actually "wash" his image, as he undoubtedly hopes. The Law of Unintended Consequences is likely to kick in: the controversies being generated are actually highlighting many of the matters MSB wants to wash.

Recent events, in which the President of the USA was forced to grovel at MSB's slippered feet to try & secure a few drops of cheap(er) oil show us who has the Power here. He may not like being called-out for his Human Rights abuses, but MSB is still very much in charge.
Biden & USA could easily solve this "shortage" of oil by making it up with Venezuela, which has the largest reserves of Oil & Gas anywhere. That they don't speaks volumes about RealPolitik & saving face.... "

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10. Posted by Anthony, 17/07/2022 12:51

"It’s important to remember that the F1 team is separate from, and not owned by, the AML manufacturing business. Stroll and his partners own the F1 team and are investors in AML but AML (and therefore PIF) does not have any stake in the F1 team. "

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11. Posted by Max Noble, 17/07/2022 6:15

"“Sportwashing” is a genuine issue. But so is engagement to generate reform. A very complex issue. The LIV golf series is set to make professional golf fracture. We know how that worked out for Indy car… As ever, the problem is humans, power, and money…"

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12. Posted by Greg, 16/07/2022 16:34

"Why reject the Italian offer"

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13. Posted by Superbird70, 16/07/2022 14:19

"LIV F1 coming soon"

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