18th May 2023 12:06
(Alliance News) - Aston Martin Lagonda Global Holdings PLC shares surged on Thursday, as a Chinese automotive group doubled its stake in the firm.
The luxury sports car maker announced a GBP234 million investment from Geely Holding. Geely will raise its stake in Aston Martin to 17%, buying 42 million existing shares at 335p from Yew Tree, who will remain the majority shareholder.
It also will subscribe for 28 million new shares at the same price, which represents a considerable premium to Wednesday's closing price of 230.20p.
Shares in Aston Martin jumped 15% to 265.40p each in London on Thursday.
"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," noted AJ Bell investment director Russ Mould
In the year to date, the stock is up 71%, compared to a 0.9% increase for the wider FTSE 250.
"[The massive premium] shows considerable interest in the business and suggests that Geely is serious about wanting to have more influence over how the iconic car maker is run, and how China could be a major market for the brand," Mould said.
Last year, the Chinese vehicle manufacturing giant picked up a 7.6% stake in the company.
Back in 2020, Geely had expressed interest in buying up a stake in the firm back in 2020, launching a rival bid to Lawrence Stroll.
Canadian Stroll became executive chair in April 2020. He was part of the Yew Tree consortium which bought roughly a 20% stake in the company back in 2020.
Following the transaction announced on Thursday, Yew Tree will remain the largest shareholder with around a 21% stake, as Geely's rises to around 17%. Saudi Arabia's Public Investment Fund continues to have an 18% stake.
According to AJ Bell's Mould, the interest from Geely is not unrequited.
"Aston Martin 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," he explained.
The group has recently talked about Japan and China as "rapidly expanding markets" for luxury cars, Mould notes.
Hangzhou, Zhejiang-headquarter Geely produces and sells vehicles under its own brands, as well as subsidiaries such as Volvo Cars, Polestar, Proton and Lotus.
"The British group will 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," Mould concluded.
By Elizabeth Winter, Alliance News senior markets reporter
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