Aston Martin moves towards IPO, offers pre-Brexit windfall

Bloomberg

Aston Martin is preparing to list its shares in London after the brand synonymous with UK spymaster James Bond pulled off a multi-year turnaround.
The British maker of sports cars made famous in movies from “Goldfinger” to “Skyfall” is said to target a valuation of about 5 billion pounds ($6.4 billion) — approaching Ferrari NV’s multiples. A final decision on moving forward will take place next month, parent Aston Martin Holdings (UK) Ltd. said.
The offering will allow the carmaker’s shareholders to cash out with a potential 10-fold return — months before the UK leaves the European Union. The carmaker itself won’t be raising any funds. Aston Martin will use its own earnings to pay for planned investments in electric cars and a doubling in output to around 14,000 cars a year. While the UK’s post-Brexit automotive industry is one of the sectors most exposed to potential trade hurdles, Brexit wasn’t a large factor in the IPO calculations, Chief Financial Officer Mark Wilson said.
“Brexit is simply a speed hump in the road,” Wilson said. “Aston Martin has existed for 105 years, it has seen a hell of a lot of upheaval in that time.”
Aston Martin, controlled by London-based Investindustrial Advisors Ltd. and Kuwaiti Investment Dar, said existing investors will sell at least 25 percent of the company’s stock on the London Stock Exchange. Ford Motor Co. sold the manufacturer in 2007 for 480 million pounds.
Neither investor plans to exit completely, while Mercedes-Benz maker Daimler AG, which has a 4.9 percent non-voting stake, plans to retain the holding.
Ferrari, Hermes
Like Ferrari, Gaydon, England-based Aston Martin sees itself as a luxury company, able to attract the higher valuations afforded to companies like Hermes International and Canada Goose Holdings Inc., Wilson said.
“Clearly there’s a great comparator out there and it’s Ferrari,” the executive said. “We’re going for a premium listing.”
Like its Italian rival, the British marque has broadened beyond cars, experimenting with Aston Martin-styled yachts and apartments and opening a store in London’s Mayfair shopping district where it sells branded shirts and baby strollers to wealthy patrons.
Ferrari trades at about 36 times estimated 2018 earnings, compared with about 7.3 times for members of the Stoxx Europe 600 Automobiles & Parts index. Hermes is valued at 49 times estimates, Canada Goose at 66 times. LVMH, another brand mentioned by Wilson, carries a 26 times multiple.
Chief Executive Officer Andy Palmer, a former executive at Nissan Motor Co. who took over the top job in 2014, has focused on introducing new models like the coming DBX sports utility vehicle due next year and the popular $200,000 DB11 coupe. He also plans to revive the Lagonda supercar brand with a range of electric vehicles focusing on the ultra-luxury segment with SUVs and sedans. Production rates have lifted to the highest level since the 2008 financial crash, and will rise to as many as 7,300 cars next year before doubling in the medium term.
Aston Martin also said that earnings before interest, taxes, depreciation and amortisation gained 14 percent in the first half to 106 million pounds. It’ll rely on that earnings power to fund its expansion.
Others are hungry for outside cash. Chinese electric carmaker NIO Inc., which started selling cars in China late last year, said it’s planning a US share sale that would give it a valuation topping $8 billion — highlighting the sector’s quickening transformation to electric vehicles. Aston Martin said it will file a registration document with the UK Financial Conduct Authority on Wednesday, a new requirement for companies considering an IPO, and will decide by about September 20 whether to proceed, it said. The listing could raise up to 1.5 billion pounds, according to people familiar with the matter. Deutsche Bank AG, Goldman Sachs International and J.P. Morgan Securities Plc are arranging the sale, along with Bank of America Corp., Credit Suisse Group AG, HSBC Holdings Plc and UniCredit SpA. Lazard is financial adviser to the company.