Fundraising fallout puts Aston Martin in reverse

SHARES in Aston Martin tumbled after analysts raised fresh concerns yesterday about the state of its finances.

Earlier this week, the car manufacturer unveiled plans for a mammoth £653m fundraising in a bid to pay down its debts.

The funding deal will see Saudi Arabia’s Public Investment Fund (PIF) become its second-largest shareholder, while other investors will also be asked to inject more cash.

But brokers at Jefferies concluded the fundraising would massively devalue the shares, and slashed their target price on the stock to 530p from 750p.

Analysts also said that the share price was ‘likely to remain volatile’ until new details of the fundraising were revealed. Aston Martin tanked 8.7pc, or 46p, to 483.6p following the price cut.

The Saudi fund which is controlled by Crown Prince Mohammed bin Salman, will invest around £78m, giving it a near 17pc stake and two seats on the board. It previously led a takeover of Newcastle United Football Club in a deal that was mired in controversy because of Saudi Arabia’s human rights record and the murder of US-based Saudi journalist Jamal Khashoggi in 2018.

Meanwhile, the remaining £575m of the fundraising will see PIF, as well as existing shareholder Mercedes and chairman Lawrence Stroll’s Yew Tree Consortium, inject more cash into the group, with other shareholders stumping up £318m.

As much as half will be used to pay down debts, which Jefferies estimated would be £600m following the fundraising, compared to £957m at the end of March. The

FTSE 100 was up 0.1pc, or 5.86 points, at 7276.37 while the FTSE 250 climbed 0.6pc, or 115.53 points, to 19,824.77.

Traders hoped to end the week on a high note, with the recent UK sales data providing relief for some retailers despite the overarching theme being that people were spending less amid the rising cost of living.

An increase in food sales in June due to the Jubilee celebrations appeared to lift Sainsbury’s as it added 1.8pc, or 3.8p, to 220.4p but Tesco was down by 0.7pc, or 1.7p, to 259.4p.

Meanwhile, shares in grocery giant Ocado jumped 5.1pc, or 38.4p, to 791.6p after upbeat results from one of its European rivals, Delivery Hero.

Oil stocks wobbled a little as Brent crude ticked up towards $104 a barrel. BP fell 0.2pc, or 0.6p, to 383.3p while Shell rose 0.5pc, or 11p, to 2039.5p.

Lloyd’s of London insurance firm Beazley surged 9.4pc, or 45p, to 522p after it reported a 26pc jump in premiums to £2.1bn in the six months to the end of June despite the firm taking a £162m hit from its investments due to ‘very unusual market conditions’ as the war in Ukraine and soaring inflation sent markets into panic.

Shares in British Airways owner IAG climbed 1.2pc, or 1.34p, to 114.8p after staff at Heathrow airport called off strike action in accepting a pay offer.

Members of Unite and the GMB had voted for industrial action after urging BA to restore levels of pay slashed in the pandemic.

Nadine Houghton, national officer for the GMB union, said: ‘No one wanted a summer strike at Heathrow, but our members had to fight for what was right.’

Workers will now get an 8pc pay rise, a one-off bonus and the reinstatement of shift pay.

Meanwhile, more than 500 members of Unite, who had voted in favour of industrial action over the dispute with British Airways, also accepted a pay offer.

Unite said it was worth a 13pc pay rise for staff – and was due to be paid in several stages.