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Former Ducati owner invests in Aston Martin

Italian, not Indian: Former Ducati owner Investindustrial has beaten Mahindra & Mahindra to buy a stake in British sportscar-maker Aston Martin.

Italian private equity fund signs $230m deal for 37.5 per cent stake in Aston Martin

10 Dec 2012

FORMER Ducati owner Investindustrial, an Italian private equity fund, has secured a 37.5 per cent stake in British sportscar brand Aston Martin for £150 million ($A230m).

A parts and technology-sharing arrangement with Mercedes-Benz performance arm AMG was mooted as part of the Investindustrial deal but was not mentioned in the announcement, and there are now conflicting reports over whether it will happen.

As reported last month, Indian conglomerate Mahindra & Mahindra had offered Aston’s Kuwaiti majority shareholder, The Investment Dar, a larger sum than Investindustrial and was tipped to win the two-way investment battle for up to a 50 per cent stake.

However, Investindustrial’s experience with turning around premium motorcycle brand Ducati, which it sold to Volkswagen Group luxury brand Audi for $US1.1 billion ($A1.05bn) in April, along with the unconfirmed AMG link was thought to be more beneficial than cold hard cash.

Investindustrial senior principal Andrea Bonomi said the fund plans to help expand Aston Martin’s model range and strengthen its global dealership network, with the intention of achieving “a similar transformation and rejuvenation that we achieved with Ducati”.

Announcing the investment, Aston Martin said it “will now proceed with its extensive and exciting plans for sustainable long-term growth”.

The cash injection will help Aston Martin – which will celebrate its 100th year in 2013 – to execute its plan to invest “more than half a billion pounds” in new product and technology development over the next five years.

“With the support of The Investment Dar and Investindustrial, the company is well positioned to realise its ambitious growth strategy,” said the company in a statement.

In 2007, Ford sold 90 per cent of Aston Martin to a consortium led by British automotive entrepreneur and former F1 team principal David Richards – who remains chairman – for £480m.

Investindustrial’s price for the 37.5 per cent stake in Aston Martin would seem to value the company lower than when Ford offloaded it.

Ford continues to supply Aston with V8 and V12 engines from its facility in Cologne, Germany, but that agreement reportedly ends next year, requiring the British firm to find another partner or invest heavily in developing its own engines.

Not being part of a wider automotive group also means corporate average fuel economy (CAFE) regulations could hit Aston Martin hard in future – something it has tried to counter with the tiny Toyota iQ-based Cygnet luxury city car.

Other former Ford Premier Automotive Group brands Jaguar Land Rover (owned by Indian conglomerate Tata) and Volvo (owned by Chinese car-maker Geely) also use Ford engines but are in the process of developing their own four-cylinder units.

Mr Richards said the deal with Investindustrial “reflects and sustains the unique position of Aston Martin within the industry”.

“With this partnership and the continued commitment of The Investment Dar, we look forward to working with our shareholders as we realise our vision and exciting future plans.”

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