One of China’s biggest car makers has doubled its stake in Aston Martin in a vote of confidence in the UK motor industry.
Geely spent £234million raising its holding to 17 per cent, making it the third-largest shareholder in the British company behind a consortium led by Aston chairman Lawrence Stroll and Saudi Arabia’s Public Investment Fund, which bought Newcastle United FC in 2021.
Geely, which owns Lotus and Volvo, snapped up around 42m shares from Stroll’s group at 335p each and a further 28m new shares at the same price.
Aston Martin shares rose 12.5 per cent, or 28.8p, to 260p.
Stake: Geely, which owns Lotus and Volvo, spent £234m raising its holding in Aston Martin to 17%, making it the third-largest shareholder in the British company.
The agreement promises to create a ‘long-term partnership’ and supply materials to the car brand, a favourite of James Bond.
The move raises £95million for Aston, which has had a bumper year as demand for luxury goods remains resilient despite economic pressures on consumers.
It said this month that revenues climbed nearly a third in the first three months of 2023 to £295million, while losses narrowed to £74.2million.
Victoria Scholar, analyst at Interactive Investor, said: ‘This is a welcome development at a time when there are growing concerns about the Brexit trade deal for UK auto manufacturing.’
Vauxhall owner Stellantis this week sounded the alarm over potential tariffs on exports of electric cars to the EU.
It warned it may have to close UK factories, costing thousands of jobs, because of rules that dictate 45 per cent of electric vehicle parts should originate in the UK or EU to qualify for free trade.
But with a shortage of batteries in Britain and on the Continent, car makers warn this is increasingly difficult.
Prime Minister Rishi Sunak said: ‘It’s something that car manufacturers across Europe, not just in the UK, have raised as a concern.
As a result of that, we are engaged in a dialogue with the EU about how we might address those concerns when it comes to auto manufacturing more generally.’
But the looming crisis has failed to dissuade Geely. Chairman Li Shufu, known as Eric Li, said: ‘Our decision to increase our shareholding in Aston Martin reflects our confidence in the growth prospects, its technologies and management team.’
Geely owns European brands including Sweden’s Volvo and Norfolk-based Lotus and has tried to buy Aston several times, including a rival bid to Stroll in 2020 and again last summer.
It bought a 7.6 per cent stake last September and some could perceive its latest grab as an advance towards another takeover approach.
But Russ Mould, investment director at AJ Bell, questioned ‘whether this would be publicly or politically palatable’ following other foreign takeovers.
