Aston Martin confirms £536 million cash injection and F1 entry

Aston Martin has signed an agreement with Canadian billionaire Lawrence Stroll, that will secure the company £536 million of funding. The cash injection will help the British brand push the DBX through the start of its production cycle, as well as back the company’s return to Formula 1 for the first time since the 1950s.

Stroll, who made his fortune through his investment in upmarket fashion brands, is reported by Forbes magazine to have a net worth of $2.6billion. He and his company, Yew Tree Consortium, will offer a total investment of £262 million to Aston Martin, with the remaining funds being sourced from a rights issue. Stroll will also replace Penny Hughes as chairman.

In addition, Aston Martin has opened a fresh $100 million (around £81 million) credit line after fears the business would not have the required funding to meet its spending plans for the year. The funding will be available from May of this year, and sits on top of the brand’s existing £36.7 million of loan arrangement and £40 million of inventory.

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Aston Martin’s financial troubles have been well documented of late – the company made a loss in 2018 and issued profits warnings to its shareholders last year. 

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Aston Martin’s share price has also fallen dramatically since its Initial Public Offering (IPO) of October 2018. The price has plummeted to £2.26 a share in the last week – with Aston Martin losing more than 150 percent of its value since it was offered on the stock market. 

Aston Martin’s production facilities in both Gaydon and St Athan, Wales remain closed, in accordance with the Government’s guidelines on combating the spread of COVID-19. The economic turndown caused by the pandemic has forced the company to reassess its product strategy – details of which were released alongside this financial announcement.

The new DBX SUV, which is due to go on sale in summer this year in spite of the factory closures, will be crucial to the brand’s success – along with the recent launch of the new Vantage Roadster, which is expected to comprise up to 40 per cent of all Vantage sales.

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The launch of Aston Martin’s all-electric luxury brand, Lagonda has been pushed back from 2022 to 2025, while the new Vanquish won’t be unveiled for another two years. The company will also aim to reduce its annual operating costs by £10 million, in a bid to offset the price of its all-new production facility in St Athan, South Wales.

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Stroll said: “I, and my co-investors in the consortium, continue to believe passionately in the future of Aston Martin Lagonda. This is most clearly demonstrated by our investment of £262m which underpins the financial security of the company. This is a very significant capital raise of £536m – due to be made by my consortium and other shareholders at a very challenging time. 

“This gives the necessary stability to reset the business for its long-term future.  We have a clear plan to make this happen, including Aston Martin entering an F1 works team next season and I look forward to working with the Management team to deliver this programme.”

Aston Martin’s return to Formula One racing

Lawrence Stroll owns the Racing Point Formula One team, having purchased the assets of the former Force India team in 2018.

Racing Point will undergo another change for the 2021 season, becoming a works Aston Martin team powered by Mercedes engines – just like Aston Martin’s V8 road cars. Aston Martin has signed an agreement to appear on the F1 grid for the next ten years – meaning it will return to the sport as a full factory operation for the first time since the 1950s.

The British brand will continue its sponsorship of the Red Bull Racing F1 Team for the 2020 season, while its technical partnership with the race team will remain intact until the first Valkyrie deliveries arrive later this year.

Do you think Aston Martin will flourish with investment from Lawrence Stroll? Let us know in the comments section below…