Aston Martin Still Weighing London IPO, CEO says

(Bloomberg) -- Aston Martin hasn’t yet decided on an initial public offering in London, and a listing in New York or sale of stock to a private investor remain under consideration, the luxury carmaker’s chief executive officer said.

Should Aston Martin opt for an IPO, the company must weigh the greater knowledge of its “heritage and story” among potential U.K. investors against the advantages of listing in the U.S., where rival Ferrari NV successfully sold shares in 2015, CEO Andy Palmer said in an interview.

“There are obvious arguments in favor of London but the U.S. may offer better value,” he said at the launch of Aston Martin’s new 211-mile-an-hour DBS Superleggera model in the U.K. capital. There’s probably still pent up demand in New York after the Ferrari offering saw stock priced at the top of the marketed range and climb 17 percent on its first day of trading.

Aston Martin shareholders Investindustrial Advisors Ltd. of Italy, with a 37 percent stake, and Kuwaiti funds Tejara Capital and Adeem, which hold most of the rest, could still opt to retain their holdings as the company embarks on a expansion aimed at doubling production to 14,000 cars a year, Palmer said. It’s also possible that they could sell shares to a private equity firm or trade buyer, most likely a luxury-goods investor rather than an automaker, he said.

“The final decision is one for our owners, which is why I can honestly say that nothing has been decided yet,” Palmer said. “My job is to advise them of their options, though clearly we’d prefer someone who buys into the growth story.”

Neither of the company’s two top investors plan to exit completely and a share sale would be aimed at “realizing value” rather than raising cash for the expansion strategy, the CEO said. Daimler AG will retain its 5 percent non-voting stake.

Aston Martin would target a valuation of as much as 5 billion pounds ($6.6 billion) in an IPO, people familiar with the matter said in January. Ferrari in its 2015 sale was valued at almost $10 billion. Shares of the Italian company have since surged, taking its market value to $25.9 billion.

Sky News reported Friday that Aston Martin is leaning toward a London listing and has scheduled a presentation to City analysts in coming weeks, without saying where it got the information. The IPO will include an offer of discounted stock to the company’s wealthy customers, Sky said.

A share sale in London would be a test of investor appetite for British businesses ahead of the U.K.’s planned March 2019 break with the European Union. Palmer said Brexit isn’t a huge worry for the company, which sells relatively few cars into continental Europe and is also used to dealing with tariffs in most of its export markets.

“It’s the non-tariff issues that are the bigger concern, particularly anything that brings friction to the supply chain,” Palmer said, adding of potential threats to the just-in-time model that could lead to stockpiling: ‘You don’t want to go there.”

©2018 Bloomberg L.P.