Aston to Offer Bonds, Investment Bonds
Aston Martin is perhaps best known for being the car of choice for Britain's most famous secret agent. Yes, the one with the catch phrase: “My name is Bond, James Bond”.
Now, however, the luxury sports-car maker is to offer an entirely different type of bond in an effort to raise some much-needed capital. The bonds will be offered to investors to help raise the £150 million the firm needs to produce a whole new range of models. These models are to include electric cars, luxury saloons and SUVs.
Whereas other luxury UK car marques have flourished in a booming export market, Aston Martin seems to have been singularly unable to cash in on markets that seem to be tailor-made for the firm. The Chinese in particular have shown enormous appetite for British luxury cars, and the likes of Rolls-Royce, Bentley and Jaguar Land Rover have also seen a huge increase in exports into the country. Indeed, the market has become so key and so profitable that it is now Jaguar Land Rover's biggest single market and the firm is opening a manufacturing plant there.
Aston Martin, in contrast, has been unable to gain much traction there, and the firm continues to make a loss. Those losses were due to be stemmed and the company returned to profit by 2017, but that date has now been pushed back to 2020.
The firm has declined to comment on its bond plans, but the cash is widely expected to be used to expand, rather than update, the company's model range. This current line-up includes the Vantage with V8 and V12 engines, the DB9, Rapide S and Vanquish. The company also recently launched the larger Lagonda luxury saloon, aimed at those elusive Far East and Middle East markets.
Aston Martin also recently hosted an exclusive party to unveil its DB10 concept car, which is due to feature in the next Bond film, Spectre. This prompted Aston's chief executive officer, former Nissan boss Andy Palmer, to describe 2015 as going to be an extremely busy year for the company.
Industry observers say that Aston Martin has been hampered by an ageing model line-up and a lack of available investment funds with which to update that range. This is in stark contrast to Jaguar Land Rover, whose owners, Tata, have invested heavily in the firm since buying it from Ford Motor Company. In 2013, Aston Martin sold just 4,200 cars, well sort of the 7,300 total the firm managed in 2006, before the financial crisis took hold.
The firm is currently owned by a partnership of Kuwaiti investment firm Investment Dar and the Italian private equity firm Investindustrial. These companies own around 93% of Aston Martin. Neither, however, seems inclined or able to invest the sort of sums that Aston Martin would need to compete with the sort of model line-up necessary in today's emerging markets. Mercedes has taken a 5% share as part of a deal to supply the firm with engines. Mercedes, part of Daimler Group, is thought to be interested in increasing that stake to compete with their German rivals in owning a British luxury marque. VW owns Bentley and BMW owns Rolls-Royce.
Any investment gained from the bond issue will presumably come on top of the £500 million cash injection promised to the firm when Investindustrial bought a 37.5% stake for £150 million in 2012. These plans included a replacement for the ageing DB9 in 2016.
In many ways, Aston Martin's story could belong in the same world of film as its most famous customer, James Bond. Founded in 1913, it has enjoyed many periods of success, especially under the ownership of David Brown (he of the DB name) from 1947 to 1972. Sadly, it has also known extreme financial hardship, including bankruptcy in the 1970s. Ownership by Ford aside, it has always seemed to lack the financial backing to cash in on its success and fame it has enjoyed through the James Bond movies. It remains to be seen whether this latest bond issue will provide the firm with the cash it needs to develop its model line-up and thrive.