Saudi Arabia’s Public Investment Fund (PIF) is continuing its drive in the luxury vehicle markets, becoming the second-largest shareholder in Aston Martin Lagonda.

PIF is making an initial GBP78 million investment in the luxury automotive company as part of a GBP653 million fund-raising by the struggling carmaker to reduce its GBP957 million debt burden and assist with its return to Formula 1. The new ownership structure gives Yew Tree a holding of 18.3% with Mercedes reducing its stake from 11.7% to 9.7%, while PIF will have 16.7%.

The company said the fundraising would also allow for new investment, having faced the fall-out of its 2018 flotation flop. It declared a loss of GBP214 million in 2021 on revenue of GBP1.1 billion; financing costs were GBP174 million. By 2024/25, it aims to make an adjusted cash profit of GBP500 million on revenue of GBP2 billion.

Aston Martin’s shares jumped on the announcement, but were still two-thirds down year-to-date, while quarterly losses doubled to GBP112 million in Q1. PIF beat off competition from a rival bid led by China’s Geely, which would have seen it wrest control of the carmaker in a GBP1.3 billion transaction.

Aston Martin executive chairman Lawrence Stroll said, “Overall, this is a game changing event for Aston Martin, supporting the delivery of our strategic plans and accelerating our long-term growth potential. 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.”

The Aston Martin deal comes a year after PIF participated in a GBP550 million equity raise by the British supercar manufacturer McLaren. McLaren was badly hit by the pandemic and slashed hundreds of workers in a restructuring effort overseen by Paul Walsh, who was appointed the firm’s executive chairman two years ago.   Bahrain's sovereign wealth fund, Mumtalakat, which has a 60% stake in McLaren, expects it to go public in two to three years, Mumtalakat's chief executive Khalid Al Rumaihi told Reuters this week.

PIF’s investment in Lucid Motors, alongside its stake in McLaren, make it an ideal investor in Aston Martin as it seeks to move towards electrification of its models. In a trading statement today, Aston Martin confirmed that the first fully electric Aston Martin, due to launch in 2025, is likely to utilise a Mercedes platform and technology. More EV models are planned as it pushes towards an all-electric future for its mainstream vehicles by 2030.

PIF plunged US$1 billion into Lucid, and has reaped rewards from backing the Tesla rival. Lucid’s IPO last year helped triple the value of US stocks held by Saudi Arabia’s sovereign wealth fund. By the end of Q1 2022, PIF’s stake in Lucid was worth around US$26 billion.

Photo by Shantum Singh

Related funds Mumtalakat PIF
Related tags Saudi Inc. Automotive