Aston Martin confirms its intention to go public
Gaydon's prospective IPO has been long in the making, and comes off the back of record profits
The prospect of Aston Martin going public has been a point of discussion for some time, but the manufacturer has now firmly set the ball rolling by filing a registration document with the Financial Conduct Authority - the prerequisite first step for any company considering an initial public offering.
Why now? Well, it certainly helps that last year the firm made its first profit since 2010, and expects to do even better this year (driven, in part, by sales of special edition models like the Vanquish Zagato and DB4 GT Continuation cars, according to the announcement). Aston can also justly claim to have its immediate future on a solid footing: its new plant in St Athan will open next year, and from it will emerge the Porsche Cayenne-rivalling DBX - widely expected to further boost sales in the medium term.
The launch of an SUV was at the cornerstone of Andy Palmer's plans for the brand when he took over as CEO in 2014. Flotation was probably high among his list of objectives, too - especially after Ferrari showed how splendidly it could work for a prestige car maker a year later. The IPO could see Aston valued at £5bn off the back of its expanded lineup and future prospects.
Why go public at all? The standard reason: money. Emerging from its reputation as a perennial loss-maker is all well and good, but Aston still requires significant cash flow to continue investment in its three-pillar product strategy - the famous Second Century Plan. The IPO would see a free float of at least 25 per cent of its shares, most from the Kuwaiti and Italian private equity groups that are the firm's majority owners.
Should it be valued in line with Aston's expectations, the company ought to find itself listed on the FTSE 100. Daimler will retain its 5 per cent stake. "We've got a very solid balance sheet now, very solid results. As we move into the third phase, which is the portfolio expansion, it also means we've got plenty of runway in front of us," Palmer explained to Reuters.
With a prospectus due to be published on September 20th, and pending a final decision, the manufacturer will hope to complete its flotation before the end of the year - handily ahead of Brexit. That's not a major hurdle for Aston, claims Palmer (only 25 per cent of its cars are sold in the EU) but provides further evidence nonetheless that the timing is nigh on perfect for Gaydon.
Profits last half year were £20.8M, only rising very slowly from £20.1M, so no great growth story.
The new range has not been that well received ( just look at the price drop on secondhand DB11's and/or Vantage reviews )
They are pinning a lot of their hopes on the DBX but the competition here has increased massively, with Bentley, Lamborghini, RR and soon Ferrari coming into the field.
They suffer from dis-economies of scale compared to all of the above.
And this is probably as good a time as ever to sell luxury cars - if you can't make money now, you never will ( and let's face it, their sales and nearly the company collapsed in 2008 )
Good luck to them....
The next 5 years will make or break Aston's long term future I feel, If the DBX and Lagonda launches go well and capture the imagination of the public, this could allow them to kick on in the way that the launch of the Cayenne and subsequent Macan led to Porsche achieving record profits.
The next 5 years will make or break Aston's long term future I feel, If the DBX and Lagonda launches go well and capture the imagination of the public, this could allow them to kick on in the way that the launch of the Cayenne and subsequent Macan led to Porsche achieving record profits.
The next 5 years will make or break Aston's long term future I feel, If the DBX and Lagonda launches go well and capture the imagination of the public, this could allow them to kick on in the way that the launch of the Cayenne and subsequent Macan led to Porsche achieving record profits.
The next 5 years will make or break Aston's long term future I feel, If the DBX and Lagonda launches go well and capture the imagination of the public, this could allow them to kick on in the way that the launch of the Cayenne and subsequent Macan led to Porsche achieving record profits.
Any member of joe public buying stock in the open market is a mug.
At that valuation, the only way will be down for a long time for the share price.
Any member of joe public buying stock in the open market is a mug.
At that valuation, the only way will be down for a long time for the share price.
I always wondered where the money was coming from.
Was it ever sustainable in the current business model or all predicated on a massive cash injection?
If they don’t raise as much as they forecast/need will everything start to unravel?
(I really hope not - I’m a big fan of AM)
Hopefully somebody who knows more about the business will explain - there’s usually somebody better informed on PH.
1. What’s a reasonable earnings base for AML? If you think it’s the highly distorted numbers from 2017, do not pass go, do not collect £200
2. Explain operational gearing. I’ll give you a clue, business growing it’s top line, cost base has a semi-fixed element. What happens to the bottom line?
I’m not saying £5bn is the right number. But at least start to think about this is a less than knee-jerk way
But Tesla is currently valued at some £50b.......
The market isnt always logical.
investors are betting that Telsa will build such a lead in EV and software required for the inevitable autonomous age that their lead will just be too big for the traditional manufacturers to ever catch up. The parallel with Nokia and Apple on smartphones is the obvious one - once the gap was there, the momentum was just too great and Nokia just too cumbersome and inflexible to be able to react. Plus if the competitive advantage in the coming car age is EV supply chain and software developers, their infrastructure and even their location on the west coast gives an huge step up.
I'd be more inclined to believe that a few years ago, but i think the bit that traditional manufacturers do have in their DNA - building large extremely complex objects at extremely high volume and extremely high quality - that bit is proving a lot harder for them to crack.
For Aston - am no analyst, but struggling to see how those profits in this market equals that valuation. They don't have the economies of scale their competitors can tap in to, and brand and fashion is just one dodgy car and one series of dodgy reviews away....
( have done a main board IPO / RTO ... so appreciate some of the risks / issues )
1/ ridiculous EV / EBITDA multiple for a business with sector risks
2/ very short track record of solid earnings / weak earnings quality ( 2017 figures ‘fluffed’ ?)
3/ lack of compelling story for where the growth is coming from to justify stratospheric multiple.
4/ lack of influence from shareholders ... so for anyone participating in the 25% free float .... who do you think has overall control?
5/ existing shareholders likely to vote for the deal as they got in at a much lower stock price.
6/ compelling reason for IPO is surely for existing shareholders to cash out .... rather than to raise capital?
7/ any controls to stop issuance of more stock for directors ? (Dilution risk)
I’d run a mile from this....
( have done a main board IPO / RTO ... so appreciate some of the risks / issues )
1/ ridiculous EV / EBITDA multiple for a business with sector risks
2/ very short track record of solid earnings / weak earnings quality ( 2017 figures ‘fluffed’ ?)
3/ lack of compelling story for where the growth is coming from to justify stratospheric multiple.
4/ lack of influence from shareholders ... so for anyone participating in the 25% free float .... who do you think has overall control?
5/ existing shareholders likely to vote for the deal as they got in at a much lower stock price.
6/ compelling reason for IPO is surely for existing shareholders to cash out .... rather than to raise capital?
7/ any controls to stop issuance of more stock for directors ? (Dilution risk)
I’d run a mile from this....
Can already see "car people" I know on facebook liking posts on the IPO - initially i'll be t'll get plenty of private money from joe public wanting to own a bit of Aston Martin, and some VC types will get rich(er)
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