Icon UK car manufacturer Aston Martin has been forced to drop its IPO valuation to the lower end of the range initially presented, which means it is set to miss out on inclusion into the FTSE 100. A final IPO price of £19 a share has been settled upon, which will value Aston Martin at an initial £4.3 billion. The company’s existing investors, who are selling 25% of the company, will earn around £1.1 billion as a result of listing, which will go live on the London Stock Exchange today.
With the IPO share price range presented as £17.50 to £22.50, the Italian group Investindustrial, together with Kuwait-based funds Primewagon and Adeem Investments, who sold down part of their holdings while German auto-manufacturing giant Daimler opted to hold onto its full share, will be slightly disappointed with a final price of £19. At £22.50, Aston Martin’s IPO would have valued the company at £5.1 billion, netting the existing shareholders £1.275 billion.
Aston Martin’s IPO is the second big IPO of the autumn season, following that of fintech peer-to-peer lender Funding Circle last week. The latter also closed the IPO at the bottom of its projected range. Despite that, the shares plummeted 20% yesterday on their first day of free trading. Aston Martin will be keen to avoid a similar fate.
With the market capitalisation of the smallest company currently in the FTSE 100 standing at £4.7 billion, Aston Martin’s starting share price will have to leap by almost 10% to stand a chance of inclusion into the benchmark index during its next update in December. Just being a constituent of the FTSE 100 provides significant support for a company’s market capitalisation as many asset managers, institutional and retail investors buy into passive tracker indices that follow or include it.
The company officially put a brave face on what must be considered a somewhat disappointing outcome. Chief executive Andy Palmer commented that the company was “delighted by the positive response” from investors to a
“historic milestone”. Adding “We are excited about the momentum across the company and are fully focused on continuing to deliver our exciting growth strategy”.
The IPO is only open to retail investors who are UK-based members of the Aston Martin Owners Club. Those investing online and interested in acquiring shares in the James Bond car maker who are not Aston Martin owners will have to wait for the shares sold through the IPO to float freely on the LSE before buying them.
While best known for roaring sports cars, Aston Martin has also now made its first foray into the electric car market through its new Rapide E, the company’s first all-electric sports car model. It remains to be seen how high end sports car manufacturers like Aston Martin adapt to the coming era of electric and self-driving cars, within which high performance sports cars are not the most obvious fit. However, cars such as Aston Martin have always been niche so the company and its new investors will be confident of finding a lucrative corner of the evolving car market.