The Strategist

What will Aston Martin's IPO be like?

09/20/2018 - 15:08

Aston Martin will be the first British automaker to go on an IPO in the last few decades. The company plans to reveal its on Thursday (September 20), and the firm will announce the final price range of shares by the beginning of next month.

Cedric_Ramirez via flickr
Cedric_Ramirez via flickr
In total, Aston intends to place about 57 million shares within the IPO, which is 25% of the automaker’s total number of securities. It is expected that the shares will be admitted to the London Stock Exchange already on October 8.

The market capitalization of Aston Martin after the IPO can reach £ 4.02 to $ 5.07 billion ($ 5.3- $ 6.7 billion). Thus, the company's valuation will be comparable with the current multiples of Ferrari, which entered the market in 2015. "Investors' interest in our company can be called unprecedented, they are ready for long-term investments, because they understand that Aston is just entering the path of further growth," said CEO Andy Palmer.

The company plans to produce 6200-6400 cars this year and reach a 23-percent level of profitability. By 2020, the production should grow to 9,800 cars. Like its Italian rival, Aston Martin is trying to find profitable niches outside the automotive market, experimenting, for example, with design of yachts and apartments. The company will also open a store in London where branded clothes and baby carriages will be sold.

It is worth noting that Brexit is likely to become a serious blow to the company. The forthcoming exit of the United Kingdom from the European Union, scheduled for March 2019, will result in higher import duties, which may slow production and increase costs.

All Aston cars are produced only in the UK. Andy Palmer already said that the company increased the stock of engines and basic components in case the free and unimpeded trade with the European Union ends in a few months.

"We have a very large warehouse in Wellesbourne (central England)," notes Palmer. "Speaking of tariffs... of course, we are losing profits because of the import duties imposed by the EU, but on the other hand, this loss pays off, as cars of such manufacturers as Ferrari and Lamborghini, naturally, are becoming more expensive in the UK."

Andy Palmer has been heading Aston Martin since October 2014. "This is a historic moment, he commented on his joining the company in an interview for the Financial Times. - In 1979, when I was just starting my career, there were a lot of companies involved in the auto industry in Britain. As time passed by, they disappeared. The production of cars in the UK is developing rapidly, the problem is that companies are owned by foreign countries. Now we will have our own independent car company again."

Despite the fact that Aston Martin has become bankrupt seven times for the first 100 years since its founding in 1913, henceforth this will not happen again, says Palmer. "We are a completely self-confident company, ready to conquer new peaks. "The small size and "flexibility"of Aston Martin only contributes to the success, - says Palmer. "Buying shares will allow investors to become part of our future success."