Aston Martin shares soared by more than 12 per cent this morning after Chinese automotive group Geely said it will increase its shareholding to 17 per cent with an investment of £234m.
The investment will see Geely almost double its stake in the marque, becoming its third biggest shareholder, just behind Lawrence Stroll’s Yew Tree and Saudi Arabia’s Public Investment Fund.
Stroll, Aston Martin Lagonda’s executive chairman, said “Geely can offer us a deep understanding of the key strategic growth market of China as well as the opportunity to access their range of technologies. Geely share our vision for Aston Martin and want to be a more significant shareholder.”
As part of the equity increase, Geely will also have the chance to appoint a non-executive director to Aston Martin’s board as a representative.
In September last year, Chinese firm Geely acquired 7.6 per cent share in Aston Martin and there was speculation at the time that the company would increase its holding.
The announcement follows a strong month for the luxury car maker, which saw a revenue jump of 27 per cent in the first quarter as it began to turn a corner on a turbulent 2022, which saw supply chain issues hit the firm with a half billion pound loss.
Eric Li, Geely Holding group chairman said: “Our decision to increase our shareholding in Aston Martin reflects our confidence in the company’s growth prospects, its technologies and its management team.”
“Since first acquiring our minority holding last September, we have worked collaboratively with executive chairman Lawrence Stroll and his colleagues and now look forward to exploring joint technology synergies and new growth opportunities to help this iconic automotive brand to achieve its full potential.”
In its announcement, Aston Martin said that it would receive around £95m in cash from the subscription of the new shares.
In January, Aston Martin went on a hiring spree, announcing it’s seeking to recruit over 100 new positions at its Warwickshire headquarters. This comes after Stellantis – the parent company of Vauxhall, Citroen, Peugeot and Fiat – said UK investments were in the balance due to the terms of the trade deal.
Some British firms have been looking to markets outside of Europe for new business, while Rishi Sunak in Japan today for the G7 summit, saying Japanese companies would invest £18bn in Britain.
‘Complete change in fortunes’
Russ Mould, investment director at AJ Bell, commented that “after one of the worst starts to life as a listed company, with the share price initially plummeting, there has been a complete change in fortunes for Aston Martin, with it being one of this year’s best performing stocks, up 75 per cent year-to-date.
He added that the British motoring giant has “been targeting the Asian market for some time, knowing there is great appeal in the region for its products and British heritage in general. It has recently talked about China and Japan as being ‘rapidly expanding’ markets for luxury cars. Asia Pacific accounted for £353.5 million of the car maker’s revenue in 2022, equal to a quarter of group sales.”
Aston Martin wil now “no doubt have its eye on tapping into Geely’s connections to get the best price on components and to better understand how to market to the Chinese consumer.
“For Geely, it wants to dominate the automotive industry and owning a slice of Aston Martin is another step towards achieving its goal. It is also likely to work with Aston Martin to see if it can take any learnings away from how the British cars perform.”