Five years after being purchased from Ford by a Kuwait-based financial firm, Aston Martin reportedly is seeking an equity injection.
According to Private Equity News, the British sports-car maker told debt investors during a discussion of third-quarter financial results it “was at an advanced stage to secure a capital increase, which will ensure (the auto maker) can deliver its medium- and long-term growth plans.”
Front-runners in the quest for a stake in the auto maker include Italian investment firm Investindustrial and Indian auto maker Mahindra and Mahindra, according to reports.
Aston Martin owner Investment Dar is seeking funding in exchange for a 40% equity share and 50% voting rights. The capital investment is expected to be used to finance future vehicle programs.
Unlike Jaguar and Land Rover, which received significant technology investments by Ford before being sold to Indian auto maker Tata, Aston Martin was left with its product cupboards comparatively bare.
The high-end auto maker still sources some components from Ford but needs money to develop new technology to meet increasingly stringent emissions standards, a source familiar with the matter tells WardsAuto.
The need to develop more advanced technology, combined with a still-shaky economy in the U.S., Aston Martin’s largest market, has painted the famed British marque into a corner.
The search for capital investment comes as the auto maker’s sales have been sliding. Investor service Moody’s says Aston Martin deliveries through September have slumped 19.5% from year-ago. Demand for its pricey V-12 models has fallen to just 56% of total deliveries, while less-expensive V-8 models now account for 37%.
While details are sketchy, reports indicate the two bidders have offered about $400 million for a stake in the auto maker, best known as a favorite of fictional spy James Bond.
Should Mahindra win out, it would be another step in its bid to expand operations beyond India, much the same way Tata did when it purchased Jaguar and Land Rover from Ford for $2.3 billion in June 2008.
Mahindra also was a bidder for JLR and in 2010 took a major stake in South Korean utility-vehicle maker Ssangyong.
However, Mahindra’s effort to launch a small, diesel-powered pickup in the U.S. was a failure.
The Indian auto maker entered an agreement with Global Vehicles U.S.A. to set up a distribution network for the pickups in 2008. While some 347 dealers signed up to sell the vehicles, a legal battle between the partners ultimately derailed the venture.
Dave Sullivan, manager-product analysis for AutoPacific, says he doesn’t see what Mahindra could gain from acquiring an equity stake in Aston Martin other than an ego boost.
“There’s definitely an allure of the brand,” he says. “To own part of a company like that is something else. There’s definitely a vanity factor to owning it.”
