AML - Stock Market Listing
Discussion
alscar said:
Presumably you would only double your money if you had paid £5 per share but if you did then yes !
If on the other hand you invested at the IPO at £ 19 then the conundrum is do you get out at double the existing price but still take a 50% hit or wait and see ?If oversubscribed btw then you wont necessarily be selling all your shares anyway.
The right course of action is to accept the £10 offer either way. If you manage to sell any shares you can buy them back at the current price.If on the other hand you invested at the IPO at £ 19 then the conundrum is do you get out at double the existing price but still take a 50% hit or wait and see ?If oversubscribed btw then you wont necessarily be selling all your shares anyway.
One point made in a few of the financial articles about the £10 share offer is why are they not required to launch a full bid for AML. My understanding from those articles alone suggest that under stock market rules their shareholding will take them to a level where a full bid is compulsory ?
pschlute said:
One point made in a few of the financial articles about the £10 share offer is why are they not required to launch a full bid for AML. My understanding from those articles alone suggest that under stock market rules their shareholding will take them to a level where a full bid is compulsory ?
I have not checked the figures again but from memory, after they sold some of their shares in the IPO, their remaining total holdings were still above 30%.
The IPO Prospectus has an explanation, about special permission being obtained to be exempt from making a full bid.
Did not read very thoroughly, but they might have also needed further permission for this 3% increase to also be exempt.
That is roughly the explanation, but you are right about 30% normally being the cut off point.
China based Detroit Electric confirmed as the proposed £20m buyer of the intellectual rights to the Vanquish. The deal is now dead, with the first of the £5m payments being already overdue when the deal was initially announced.
https://europe.autonews.com/automakers/aston-marti...
https://europe.autonews.com/automakers/aston-marti...
I thought this was a useful summation on the status quo:
https://fortune.com/2019/08/20/aston-martin-stock-...
https://fortune.com/2019/08/20/aston-martin-stock-...
Cold said:
China based Detroit Electric confirmed as the proposed £20m buyer of the intellectual rights to the Vanquish. The deal is now dead, with the first of the £5m payments being already overdue when the deal was initially announced.
https://europe.autonews.com/automakers/aston-marti...
Does anyone know if AM actually delivered the tooling?https://europe.autonews.com/automakers/aston-marti...
LooneyTunes said:
Does anyone know if AM actually delivered the tooling?
I don't, but contract law would presumably indicate that AML would still own that property, even if it has been delivered.
However, probably of little use now to AML anyway.
Do you think it was a bit cheeky that the default took some time to be announced, particularly because the amount involved almost equaled the total pre-tax profit for H1 2018? Those results were the last before investors bought into the IPO, therefore unaware that there was actually almost no pre-tax profit for H1.
Edited by Jon39 on Tuesday 20th August 22:17
Jon39 said:
I don't, but contract law would presumably indicate that AML would still own that property, even if it has been delivered.
However, probably of little use now to AML anyway.
Do you think it was a bit cheeky that the default took some time to be announced, particularly because the amount involved almost equaled the total pre-tax profit for H1 2018? Those results were the last before investors bought into the IPO, therefore unaware that there was actually almost no pre-tax profit for H1.
Edited by Jon39 on Tuesday 20th August 22:17
soofsayer said:
I thought this was a useful summation on the status quo:
https://fortune.com/2019/08/20/aston-martin-stock-...
Enlightening.https://fortune.com/2019/08/20/aston-martin-stock-...
So how was that £19 million " deal " with DE described in the IPO ?
Apparently there were already concerns about whether DE were in a position to complete on the arrangement before the IPO so how could it be shown as a profit in the accounts ?
At the very least , if regulations allowed it to be shown as a profit, there should have been a caveat expressing the fact that the profit depended on the completion of that deal.
It appears very shady to me but I'm just a geezer that's used to playing with a straight bat.
avinalarf said:
Enlightening.
So how was that £19 million " deal " with DE described in the IPO ?
Apparently there were already concerns about whether DE were in a position to complete on the arrangement before the IPO so how could it be shown as a profit in the accounts ?
At the very least , if regulations allowed it to be shown as a profit, there should have been a caveat expressing the fact that the profit depended on the completion of that deal.
It appears very shady to me but I'm just a geezer that's used to playing with a straight bat.
Fully described in the IPO document and, to be honest, almost totally irrelevant to the stock price as it’s a “one-off” not a recurring item. But it makes for a fun diversion guessing who bought the IP and what they were planning on doing with a 20(?) year old designSo how was that £19 million " deal " with DE described in the IPO ?
Apparently there were already concerns about whether DE were in a position to complete on the arrangement before the IPO so how could it be shown as a profit in the accounts ?
At the very least , if regulations allowed it to be shown as a profit, there should have been a caveat expressing the fact that the profit depended on the completion of that deal.
It appears very shady to me but I'm just a geezer that's used to playing with a straight bat.
RobDown said:
Fully described in the IPO document and, to be honest, almost totally irrelevant to the stock price as it’s a “one-off” not a recurring item. But it makes for a fun diversion guessing who bought the IP and what they were planning on doing with a 20(?) year old design
I agree that it may not have been relevant in the scheme of things.However , in a fictitious scenario, if a company knew it's profits were going to be about zero for the period before an IPO how convenient to be able to post a profit of £19 million.
I'm still bemused how AM shares could lose 75% of their value in 8 months notwithstanding the unpredictable times we are in at present.
China , Russia, Brexit all these were factors which could always have proved problematic.
It's not as if it's a tech company , it's the same company as that when floated with the same potentials for future success .
As you know one answer has been that AM is virtually focussed on the luxury car market where multiples are much less than the luxury goods market, Ferrari being an example of a more diversified Brand but that was a known at the IPO.
Another and I believe , correct me if I'm wrong, more apposite factor is that no new money was created at the IPO and it was the management that was able to realise their investment.
avinalarf said:
...... Another and I believe , correct me if I'm wrong, more apposite factor is that no new money was created at the IPO and it was the management that was able to realise their investment.
A comprehensive post Steven.
You are correct that no new money was raised in the IPO by the Company.
That surprised me at the time, as it is very normal for additional equity capital to be raised in an IPO.
Presumably they must have considered this, but decided no. A strange decision, because developing many new models is very expensive. Equity money does not have to be repaid and no dividends have to be paid either, unlike a loan where there are obligations for both interest and repayment. A further percentage of ownership is obviously handed out, but at £19 it would have been a much smaller percentage compared with now, to raise the same amount of money.
I think some management (and ex-management) did sell in the IPO, but the biggest sellers were the existing two main investors.
Investindustrial sold some of their shareholding and raised (I think) £450 million.
If as was widely thought, the pre-IPO hype created an artificially high flotation share price, then I wonder what Investindustrial think, because they gained £450 million, but their remaining holding now has (I think) a value loss since the IPO of £1 billion. A very significant amount even in the private equity world.
Jon39 said:
Investindustrial sold some of their shareholding and raised (I think) £450 million.
If as was widely thought, the pre-IPO hype created an artificially high flotation share price, then I wonder what Investindustrial think, because they gained £450 million, but their remaining holding now has (I think) a value loss since the IPO of £1 billion. A very significant amount even in the private equity world.
Yes, I know the shares are down massively, but that affects the new shareholders more than the existing investors / owners.
You are quite right Neil, but I did say value loss not actual loss.
Valuing investments can get more complicated the deeper one delves.
I think they might have subscribed further capital, in addition to their initial investment which you described.
One could also consider money value changes during the period of investment. £1 in 2012 is of course not worth £1 now.
( I have mentioned this before, but their significant involvement beginning in 2012, was prior to Andy Palmer becoming CEO. )
Overall though, to own an asset which at one point is worth X, then just 10 months later is worth X minus £1billion, might make sleeping at night slightly tricky for some people. As you say it is only on paper, but they must have concerns, hence the 3% repurchase, which cannot have gone to plan and they have ended up paying 6.8 million times, £10 for £5 (£4.70 today).
The share price now is representing investors anxieties about a possible rights issue to raise additional money. Perhaps the early DBX customers will be asked to pay a significant reservation deposit at the time of order. That would help cashflow in the period before production commences.
Edited by Jon39 on Wednesday 21st August 17:48
Veg said:
Wonder how much of that £450m went on Morgan? Timing was very adjacent...
I would need to check (and I’m not in the office) as to whether it’s the same fund (Invest Industrial has several).The £20m is genuinely not material. It would have made absolutely zero difference to investors valuations (well £20m of difference). All the valuations are done on projected profits, in the case of AML several years ahead as its in a build phase.
As Stephen says above it would be quite normal to raise money in an IPO. However, in the meeting I sat in with AP etc they were adamant they didn’t need new cash based on their projections. They still think that’s the case. But should they need to raise more money management are saying it will come from the debt markets rather than new equity (I would
Imagine the existing owners would underwrite that if need be).
One major issue here is seasonality. Aston sales are skewed towards Q4 (which the investment community hasn’t quite got its arms around yet). So the working capital requirement builds in Q2/3. That’s compounded by the cost of developing DBX at the moment.
If the cash flow picture improves in Q3 (AML has by all accounts turned down it’s production volume which will help) and the early signs of DBX order book build look good then that should naturally help. Of course if DBX looks poor all bets are off
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