Deleter News | World - Sports - Politics | Is bumpy ride for Aston Martin IPO justified?
Is bumpy ride for Aston Martin IPO justified?
For what is the most recognisable brand name to float on the London Stock Exchange this year - and easily the most glamorous - Aston Martin has had an unexpectedly bumpy drive towards its Initial Public Offering (IPO) today.
The financial press disobligingly made much of the fact that the carmaker, which dates back to 1913, has gone bankrupt seven times in its history.
There were also suggestions that the valuation of the company was too rich.
The initial range published for Aston Martin's shares was between £17.50 each and £22.50 each, valuing the company at between £4bn-£5.1bn.
This was later narrowed to £18.50-£20, valuing the carmaker at between £4.25bn-£4.5bn.
At the higher end of that range, it was pointed out, shares of Aston Martin would have been valued at 22 times earnings, compared with just 21 times for Ferrari, the closest quoted peer the British company has.
This, some observers suggested, over-valued Aston Martin. The influential Lex column in the Financial Times said it was "an audaciously expensive" valuation and noted that, while being rated more highly than Ferrari, Aston Martin's profit margins were not as strong as the Italian carmaker.
In the event, Aston Martin's shares were priced at £19, valuing it at £4.33bn. They have fallen in trading this morning and at one point were as low as £17.45p.
Not that Andy Palmer, Aston Martin's chief executive and the man who has brought the company to today's milestone, was complaining.
He told Sky News he wanted the company to be judged on its performance over the next few years rather than one morning's movement in the shares.
Mr Palmer, a working class boy from the West Midlands who left school at 16 to become an apprentice at local firm UK Automotive Products and who joined Aston Martin from Nissan in 2014, could instead take pride in the fact that this is the first British carmaker to be listed on the London Stock Exchange since Jaguar, a founder member of the FTSE-100, was taken over by Ford in 1990.
In a Union Jack-bedecked Paternoster Square, outside the stock exchange building, there was no sign of any scepticism towards the company.
The City of London Corporation's notoriously fussy officials had given their permission for a display of Aston Martins old and new, including the £2.5m Valkyrie "hyper car" and the iconic DB5 driven by Sean Connery as James Bond in Goldfinger, which attracted a steady stream of admirers from nearby offices.
One City gent, declaring himself an owner of a DB9, stepped forward to shake Mr Palmer's hand and congratulate him on the flotation.
Aston Martin is raising no new money from the flotation, the biggest so far in 2018 on the London Stock Exchange, in which a quarter of the company's shares were sold.
The listing of Aston Martin Lagonda Global Holdings, to give the company its full name, was merely to enable existing shareholders, including Italian private equity firm InvestIndustrial and the Kuwaiti firms Adeem Investments and Primewagon, to take some money off the table.
Mr Palmer insisted that Aston Martin has all the money it needs for its future investment plans. And those plans are ambitious.
In what Mr Palmer calls his "seven in seven" strategy, the company is aiming to launch a new model every year between 2016 and 2022, with the DB11, the Vantage and the DBS already launched.
Next up will be the DBX, the first sports utility vehicle in Aston Martin's history, which will be built at the company's new factory at St Athan in south Wales.
That plant, which has led to the creation of 750 skilled jobs in the Vale of Glamorgan, will also be where the company's push towards electric vehicles will be based.
Among the products being planned is the new battery-powered Lagonda Rapide E - billed as the world's first zero-emission luxury car.
The expansion will eventually see Aston Martin's production double to 14,000 vehicles per year in the five years from 2017 to 2022.
But won't that dilute the exclusivity of the brand? Mr Palmer insists not.
He points out that, with new buyers emerging from countries like China - which now snaps up one in every six cars built by Aston Martin - the ranks of the world's super-rich are expanding far more rapidly than Aston Martin can expand production, meaning that, in theory, the brand will be more exclusive than ever.
Incredibly, given that it has been going since 1913, Aston Martin has only built around 85,000 cars in its entire history.
It is an inspiring story in many ways.
Yet a number of fund managers remain wary. The high valuation applied to Aston Martin at flotation means that, according to sceptics, the launches of the other new vehicles between now and 2022 will have to be flawless.
There is also anxiety in some quarters that Brexit may lead to production delays if parts imported from the EU are held up at channel ports.
Mr Palmer insists the company has sought to mitigate the impact of any hard Brexit by extending its stockpiles and buying parts further in advance. Parts would need to be held up at the ports for nine days before they started to hit production.
But one group of investors was only too happy to buy shares in the flotation. Getting on for half of Aston Martin's 2,700 employees took advantage of the opportunity to buy shares in the company at flotation.
Mr Palmer, who entered the British car-making industry as it was being brought to its knees by shop stewards like Derek 'Red Robbo' Robinson and who remembers the fraught relationship that British car workers used to have with their managers, regards it as one of the most satisfying dimensions of today's flotation.