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Luxury carmaker Aston Martin prices Aston-ishing £5bn London float

Last updated: 09:32 20 Sep 2018 BST, First published: 09:24 20 Sep 2018 BST

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Aston will be the only carmaker listed in London when it floats next month

Aston Martin Lagonda Global Holdings PLC is targeting a £5bn valuation when it lists on the London Stock Exchange next month.

The luxury carmaker told the City on Thursday that it expects to sell 25% of its shares for somewhere between 1,750p and 2,250p each as part of the initial public offering.

On the low side, that gives Aston a market capitalisation of £4.02bn, but if it can get investors to pay the top price, it will be worth £5.07bn.

READ: Could retail investors drive Aston onto the FTSE 100?

Such a value would put the company on similar earnings multiples to Ferrari, which analysts had previously thought was unlikely, given the Italian giant’s more expensive and in-demand cars.

It would also likely put Aston towards the top of the FTSE 250, putting it wheel-to-wheel with the likes of Marks and Spencer Group Plc (LON:MKS), Severn Trent PLC (LON:SVT) and Royal Mail PLC (LON:RMG).

“By becoming the only automotive company listed on the London Stock Exchange, Aston Martin Lagonda will provide investors with a fitting opportunity to participate in our future success,” said chief executive Andy Palmer.

“[Our] track record has created significant interest in the Aston Martin Lagonda offer, and we are pleased to offer shares not only to institutional investors but also to our eligible UK resident employees, customers and members of the Aston Martin Owners Club.”

Quite a turnaround

The move to list on the LSE marks quite a turnaround for the business under CEO Palmer and his ‘Second Century Plan’.

Aston has gone bankrupt seven times in its 105-year history but last year turned its first annual profit since 2010, with pre-tax profits coming in at £87mln, reversing the £163mln loss from 2016.

Palmer has been positioning the company for a stock market float since he joined from Nissan back in 2014.

Aston’s shares are expected to begin trading on October 3.

Ferrari shares faltered in opening weeks

“It’s important for potential investors to concentrate on the company’s long-term financial prospects and not to get carried away by the brand,” said Laith Khalaf, senior analyst at Hargreaves Lansdown.

“That means having a thorough read of all relevant information the company is producing as part of its float and only investing if they are happy with all the risks involved.”

He added: “When Ferrari listed on the stock market is was priced at US$52 per share. The share price faltered in the first five months, falling by around 38%.

“It has since rallied to around US$135, though this serves to highlight that just because a well-known brand launches on the market, share price movement on flotation is always a two-way street.”

--Updates for analyst comment and additional info--

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