Lawrence Stroll’s consortium to invest £182m and his Racing Point team will be rebranded
The billionaire Lawrence Stroll is leading a consortium that will invest £182m in return for 16.7% of Aston Martin, which will also launch a £318m rights issue.
Photograph: Arnd Wiegmann/Reuters
Aston Martin has agreed a £500m equity rescue deal led by the billionaire Lawrence Stroll under which the British car brand will enter Formula One racing from 2021.
The Racing Point F1 team controlled by Stroll will become the Aston Martin F1 works team for at least 10 years with effect from the 2021 season, the company said.
Stroll is leading a consortium that will invest £182m in return for 16.7% of the struggling carmaker, which will also launch a £318m rights issue. Stroll’s consortium also includes his business partners from fashion investments in which he made his fortune, and Anthony Bamford, the chairman of the digger maker JCB, who is also known for his political donations to Boris Johnson and the leave campaigns.
The newly issued shares will be priced at £4 per share, far below the company’s stock market float price of £19 in October 2019. The precipitous fall in the company’s value, to only £918m on Thursday night, has followed a string of warnings that weak 2019 sales were leaving it short of cash.
Shares in Aston Martin jumped 25% after the deal was announced, up 106p to 508p – still barely a quarter of their float price.
The stock market float was predicated on the successful launch of the DBX, the first SUV from Aston Martin, which is expected to go into production in the spring. It was hoped that the DBX would eventually double the Warwickshire-based company’s annual sales. However, it also involved heavy investment in a new factory in south Wales before revenues from the car arrived.
Aston Martin also said it would hold back investment in electric vehicles beyond 2025 after reviewing its business and that it would seek to cut costs by £10m a year.
As part of the deal, Penny Hughes, the chair brought in to oversee the disastrous float, will resign. She said a difficult 2019 had left Aston Martin “no alternative” but to seek the new financing.
Andy Palmer, who remains Aston Martin’s chief executive, said a “regrettably disappointing and challenging time” in 2019 had resulted in “a stressed position with severe pressure on liquidity”.
Stroll, 60, was a fashion investor who previously backed brands such as Pierre Cardin, Ralph Lauren and Tommy Hilfiger. The Canadian made much of his fortune when he and his business partner Silas Chou masterminded the 2011 initial public offering of the American fashion brand Michael Kors. Stroll’s net worth is $2.6bn, according to Forbes.
In August 2018, Stroll led a group of investors to buy the Formula One racing team Force India for £90m plus assumption of £15m in debt. He then renamed it Racing Point and his son Lance last year moved from Williams to drive for it. Stroll is a collector of vintage Ferraris.
He lives in Geneva but also has homes in London, Quebec and on the island of Mustique, according to reports.