The Saudi fund will become the second largest shareholder of Aston Martin

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  • Aston Martin shares 20%
  • Mercedes, Yew Tree to cut the stake
  • £575m separate rights issue

July 15 (Reuters) – Shares of Aston Martin (AML.L) jumped 20% on Friday after the British luxury carmaker announced a capital raise that will see Saudi Arabia’s Public Investment Fund (PIF) become its second largest shareholder with nearly 17% stake.

PIF’s £78m investment, along with a £575m rights issue, will see the 109-year-old company reduce debt and invest in new models.

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

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The sovereign wealth fund, which has stakes in electric carmaker Lucid Motors (LCID.O) and British supercar group McLaren, has diversified its oil-heavy investment portfolio.

For Aston Martin, the favorite car of fictional secret agent James Bond, which has gone bankrupt seven times in its history, this investment secures its long-term future.

Its current second largest shareholder, German automaker Mercedes-Benz AG, will hold around 9.7% after the capital increase.

A LEGACY IN INDEBTEDNESS

The Aston Martin logo is seen on a V12 Vantage car at the company’s factory in Gaydon, Britain March 16, 2022. REUTERS/Phil Noble

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

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

Half of the new capital will be used to repay the debt which stood at 957 million pounds at the end of March.

The company has also pushed back the date it will start producing silver from 2023 to 2024.

The automaker said the former owner of Italian investment group Investindustrial and China’s Geely offered up to £1.3 billion in funds last week, which the board rejected.

The pair are said to have injected £203m for a stake, making them the largest shareholder.

Stroll said the proposal would have been very dilutive for shareholders and felt it was a disguised takeover bid.

($1 = 0.8446 pounds)

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Reporting by Eva Mathews in Bengaluru; Editing by Arun Koyyur, Tomasz Janowski and Louise Heavens

Our standards: The Thomson Reuters Trust Principles.

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