(Reuters) -Saudi Arabia’s sovereign wealth fund will buy a nearly 17 percent stake in Aston Martin as part of a capital raise to pay off debt and strengthen the company, the British luxury carmaker said on Friday.
The company said it planned to raise 653 million pounds ($773.15 million) through PIF’s 78 million pound investment and a separate 575 million pound rights issue. This was because the company had a lot of debt, its stock had dropped a lot, and its Formula One team was having trouble.
After the rights issue, the Saudi fund will own 16.7% of Aston Martin, which is second only to Chairman Lawrence Stroll’s Yew Tree, which will own 18.3%. The Saudi fund will have the right to two board seats at the car company.
After the capital increase, the German car company Mercedes-Benz AG, which is currently the second-largest shareholder, will own about 9.7 percent. The company hoped to increase its market share to as much as 20% by 2023.
Since its first public offering in late 2018, when it was often seen in James Bond movies, Aston Martin has had a rough time. Its shares that are traded in London have dropped by almost 73% so far this year. They went up 10% on Friday morning after hitting an all-time low earlier in the day.
Aston Martin says that half of the new money will be used to pay off debt. At the end of March, the company owed 957 million pounds. It will also speed up capital spending in the future.
The Financial Times said on Thursday that Aston Martin was close to a deal that would bring in the Saudi fund as a major shareholder and raise more than 500 million pounds.
PIF, which has shares in electric car company Lucid and British supercar company McLaren, did not respond right away to a request for comment from Reuters.
Aston Martin also said that it sold 2,676 cars wholesale in the first half of 2022, which is less than the 2,901 cars it sold at the same time last year. It thinks that it will sell more than 6,660 units this year.
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