Kuwaiti firm TID will hold on to 24% in niche carmaker

Aston Martin’s top bidders — Indian conglomerate Mahindra and Mahindra and European private equity fund Investindustrial and Toyota, may not have it that easy.

Any deal that fructifies is likely to be smaller than 50 per cent to avoid upsetting the company’s capital structure.

The winning bidder of the luxury automotive major is set to get just 40 per cent equity share and 50 per cent of the voting rights, with the Kuwaiti owner of Aston Martin able to sell only a minority stake in the luxury UK carmaker, officials privy to the deal told Business Line.

Thrills and elegance

The structure of the company ensures that The Investment Dar (TID), the Kuwaiti company that owns half of Aston Martin, will continue to hold on to 24 per cent, officials said.

Aston Martin makes cars that place equal emphasis on high-thrill performance and discreet British elegance. The manufacturer’s line-up is small but highly specialised. The British company is also said to be considering an equity injection.

At its third quarter results announcement on November 28, Aston Martin admitted to bond-holders that it had been talking to investors about an equity injection. “Aston Martin, with the support of its shareholders, confirms that discussions are at an advanced stage to secure a capital increase which will ensure it can deliver its medium and long-term growth plans,” the company said. Though Aston Martin’s Chief Financial Officer Hanno Kirner refused to elaborate at the earnings call, TID, the Kuwait-based financial firm apparently holds the keys. US-based motor giant Ford sold Aston Martin to TID and Adeem Invesment for $767 million in 2007. Last year, TID had checked in with its core group of creditors to restructure about $3.6 billion of debt.

In the aftermath of the global financial crisis, the company defaulted on debt and had missed paying up a $100-million Islamic bond in May 2009.

Since that time, the company’s restructuring has been stymied by protracted negotiations and legal obstacles. Most of its creditors’ co-ordinating committee resigned last year.

Technology advantage

It was around this time that Italian private equity group Investindustrial appeared in the rear-view mirror with its focus firmly fixed on the driver’s seat. With more than €3 billion of assets under management, Investindustrial is Aston Martin's second biggest bidder after M&M.

The company provides global industrial solutions and capital to mid-market companies in Southern Europe.

Earlier this year, it sold Italian motorcycle company Ducati to Audi and has a technology and parts sharing deal with Mercedes-Benz.

Investindustrial’s bid is about $400 million, with the firm confident of its ‘technically superior’ proposal.

Given its partnership with Daimler’s Mercedes, officials said the deal could provide Aston Martin an avenue for engine supply after its agreement with former owner Ford ends next year.


(This article was published on December 3, 2012)
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