Luxury carmaker Aston Martin Lagonda on Friday set out plans to raise £653 million in equity, with backing from the one of the world’s largest sovereign wealth funds, after rejecting an alternative £1.3 billion investment offer.
Aston Martin proposed an equity raise of £653 million, led by Public Investment Fund, the sovereign wealth fund of Saudi Arabia. PIF, the Yew Tree Consortium and Aston Martin peer Mercedes-Benz are together expected to invest £335 million in total.
Formed in 1971 to support the Saudi economy, PIF has $620 billion in assets under management.
Aston Martin will raise the new equity through a placing of 23.3 million shares at a price of £3.35 each for £78.0 million, followed by an underwritten rights issue to raise £575 million.
The stock closed on Thursday at £4.21. It was up 6.2% early Friday in London at 394.13 pence.
Proceeds from the fundraise will go towards the repayment of existing debt, improvement of the company’s cash flow generation and to provide a liquidity cushion for what remains a challenging operating environment, Aston Martin said.
At the end of June, industry publication Autocar reported that Aston Martin was seeking to raise funds, but due to £1.2 billion of outstanding loans and bank drafts, it would be unable to raise funds by taking on more debt. Autocar also reported that the fundraising could include bringing a significant new investor in, potentially offering a position on the company’s board as an inducement.
On Friday, Aston Martin said PIF will be given two seats on the board, assuming it has a 10% stake in the company following the equity raise. Meanwhile, the Mercedes stake will slip to 9.7% from 11.7% currently, despite it taking up its full entitlement of shares.
Aston Martin also confirmed that it rejected an offer from Investindustrial Group Holdings and Geely International Hong Kong - collectively the Atlas Consortium - for an equity investment of up to £1.3 billion, comprising a £203 million firm placing and subsequent £1.11 billion underwritten rights issue.
‘The board of Aston Martin believes that the proposal markedly overestimated the company’s new equity capital requirements, would have been heavily dilutive for existing shareholders, and comprised a number of execution obstacles,’ the company stated.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: up 0.6% at 7,083.92
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Hang Seng: down 2.6% at 20,220.98
Nikkei 225: closed up 0.5% at 26,788.47
S&P/ASX 200: closed down 0.7% at 6,605.60
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DJIA: closed down 142.62 points, or 0.5%, at 30,630.17
S&P 500: closed down 11.40 points, or 0.3%, at 3,790.38
Nasdaq Composite: closed up just 3.60 points at 11,251,19
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EUR: flat at $1.0013 ($1.0010)
GBP: up at $1.1816 ($1.1803)
USD: down at JP¥138.56 (JP¥139.09)
Gold: down at $1,705.46 per ounce ($1,707.30)
Oil (Brent): up at $98.81 a barrel ($96.82)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Friday’s key economic events still to come
1100 CEST EU foreign trade
0830 EDT US import & export price indexes
0830 EDT US retail sales
0915 EDT US industrial production
1000 EDT US University of Michigan survey of consumers
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Group of 20 finance ministers and central bank chiefs met in Indonesia on Friday for talks on the fallout from Russia’s invasion of Ukraine, with the host warning them failure to tackle energy and food crises would be catastrophic. The two-day meeting on the resort island of Bali started under the shadow of a war that has roiled markets, spiked food prices and stoked breakneck inflation, a week after Moscow’s top diplomat walked out of talks with the forum’s foreign ministers. In her opening remarks, Indonesia Finance Minister Sri Mulyani Indrawati called on ministers to work together with a spirit of ‘cooperation’ because ‘the world is watching’ for solutions. Top global finance figures, including US Treasury Secretary Janet Yellen, were to discuss the rebound from the coronavirus pandemic, but the Ukraine war and its impact on an already brittle global recovery have dominated the agenda.
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The Federal Reserve watchdog has cleared two top officials of wrongdoing over stock trades that created an uproar, prompting several to leave their posts and led to rule changes at the US central bank. A key focus was trading by former Fed vice chair Richard Clarida in February 2020, just as the central bank was preparing to slash interest rates to support the economy, which sent stock prices higher. Clarida resigned in January 2022, two weeks before his term was up. Fed Chair Jerome Powell also was a target of the probe for trading by his family trust in 2019, during trading blackout periods around Fed policy meetings. In a memo to Powell, the Office of Inspector General for the Federal Reserve Board, said ‘we did not find evidence to substantiate the allegations that former vice chair Clarida or you violated laws, rules, regulations, or policies related to trading activities.’
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BROKER RATING CHANGES
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JPMorgan places BP on ’negative catalyst watch’ into results, raises price target to 530 (500) pence - ’overweight’
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JPMorgan cuts Admiral to ’underweight’ (neutral) - price target 1,750 (3,000) pence
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JPMorgan cuts Direct Line Insurance to ’neutral’ (overweight) - price target 240 (315) pence
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Berenberg raises Direct Line to ’buy’ (hold) - price target 277 pence
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COMPANIES - FTSE 100
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Fashion retailer Burberry said its sales growth in the first quarter was held back by lockdowns in mainland China. For the 13 weeks ended July 2, Burberry’s retail revenue increased 5.4% to £505 million from £479 million in the same period a year before, driven by stronger sales outside of China from the Europe, Middle East, India & Africa region and higher tourist spend in the Americas. However, comparable store sales growth was 1%, compared to a 90% increase a year prior, hindered by Covid-related lockdowns in mainland China. Excluding that region, comparable store sales grew 16%. Looking ahead, Burberry has started its £400 million share buyback, and is expected to be completed by the end of the financial year.
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Sales and support services firm DCC said its continues to expect its financial year ending March 31, 2023 to be ‘another year of profit growth’, following a robust performance in the first quarter. DCC said operating profit for the three months ended June 30 was in line with expectations and is well ahead of the same period a year before, driven by a strong performance from DCC Energy and DCC Healthcare.
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Rio Tinto produced less aluminium in the first half of 2022 due to strikes in Canada, while titanium dioxide slag production fell due to cyclones in Madagascar. The Anglo-Australian miner produced 1.5 million tonnes of aluminium for the six months ended June 30, down 9% from the same period a year before. Following this, it lowered its aluminium production guidance for 2022 to 3.0 to 3.1 million tonnes from 3.1 to 3.2 million tonnes in its previous guidance. Titanium dioxide slag production fell 2% to 566,000 tonnes for the first half. Pilbara iron ore production decreased 1% to 150.3 million tonnes due to stronger rainfall in May in Pilbara, Australia. For the second quarter, Pilbara production was up 4% year-on-year to 78.6 million tonnes as production volumes ramped up. Rio Tinto mined 7% more copper in the first half of 2022, at 252,000 tonnes.
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COMPANIES - FTSE 250
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Ninety One, a Anglo-South African money manager with headquarters in Cape Town, reported assets under management at £134.9 billion as at June 30, down 2.9% from £139.0 billion a year before. On a quarterly basis, AUM were down 6.2% from £143.9 billion as at March 31.
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COMPANIES - SMALL CAP
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Metro Bank has hired James Hopkinson as its new chief financial officer, starting September 5. Hopkinson joins from Bristol-based ClearBank, where he has been CFO since 2019. Previously, he worked for nearly 20 years at Standard Chartered.
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COMPANIES - GLOBAL
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Alibaba shares sank in Hong Kong after a report said the technology giant’s executives had been called in for meetings with Chinese officials over the theft of a vast police database. A hacker last month put on sale what they claimed was the personal information of hundreds of millions of Chinese citizens – which, if true, would make it one of the biggest data heists in history. Cybersecurity analysts subsequently confirmed that the data – partly verified by AFP – was stored on Alibaba’s cloud servers, apparently by the Shanghai police. The company’s shares dropped 5.9% to HK$102.30 in Hong Kong on Friday, hours after The Wall Street Journal reported that Shanghai authorities had called in its executives for talks in connection with the heist. The Journal cited unnamed people familiar with the matter as saying the executives included Alibaba Cloud vice president Chen Xuesong, who heads the unit’s digital public security work.
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Friday’s shareholder meetings
Aveva Group PLC - AGM
DCC PLC - AGM
DP Poland PLC - AGM
Griffin Mining Ltd - AGM
MC Mining PLC - GM re subscription
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