Aston Martin IPO

[Salma]

anyone following the above story?

What are your thoughts?

 

[Kazam]

Good brand but seems like they have a lot of debt and will be very vulnerable to Brexit. Quite a good comparison to AA's IPO here: https://www.ft.com/content/a9a73b9c-ae9d-11e8-8d14-6f049d06439c

 

[Salma]

Good brand but seems like they have a lot of debt and will be very vulnerable to Brexit. Quite a good comparison to AA's IPO here: https://www.ft.com/content/a9a73b9c-ae9d-11e8-8d14-6f049d06439c

Agree, I don’t know how institutional investors will be convinced that the IPO will be successful if the company is already in high debt.

 

[AJ]

@Selma95 I think perhaps think about this in a different way. Who are institutional investors? Why do they hold stock? Beyond company growth what is their motivation i.e what return do they want on their investment in the short, medium and long run

 

[kaveesha]

@Christy wrote a good article on the IPO if you haven't already seen it
https://www.thecorporatelawacademy.com/a-truly-british-ipo/

 

[Kazam]

@Selma95 I think perhaps think about this in a different way. Who are institutional investors? Why do they hold stock? Beyond company growth what is their motivation i.e what return do they want on their investment in the short, medium and long run

What do you mean by this?

 

[AJ]

@Kazam I was responding to the question why would institutional investors be convinced the IPO will be successful if there is already high debt. And suggested looking at it in a different way to what @Christy and others had written.

I was thinking along the lines of... who are institutional investors? Banks, funds, etc. why do they hold stock? what motivates them? Dividends, capital growth, etc

Therefore, though there might be high debt, potential dividend yields for example in a reputable brand may be of sufficient interest to offset any concerns regarding debt.

 

[Deleted member 348]

@Kazam I was responding to the question why would institutional investors be convinced the IPO will be successful if there is already high debt. And suggested looking at it in a different way to what @Christy and others had written.

I was thinking along the lines of... who are institutional investors? Banks, funds, etc. why do they hold stock? what motivates them? Dividends, capital growth, etc

Therefore, though there might be high debt, potential dividend yields for example in a reputable brand may be of sufficient interest to offset any concerns regarding debt.

That is a really interesting way to look at it.

 

[Kazam]

@Kazam I was responding to the question why would institutional investors be convinced the IPO will be successful if there is already high debt. And suggested looking at it in a different way to what @Christy and others had written.

I was thinking along the lines of... who are institutional investors? Banks, funds, etc. why do they hold stock? what motivates them? Dividends, capital growth, etc

Therefore, though there might be high debt, potential dividend yields for example in a reputable brand may be of sufficient interest to offset any concerns regarding debt.

Got it! That's interesting - I was thinking if this was an interview question, an interviewer might argue something like that.

In response, I would say that the bigger concern is pursuing an IPO while Brexit negotiations are taking place. Several car companies have warned that a no deal Brexit could force plant closures, which would be especially damaging for Aston Martin as 2/3 of its parts come from the EU. In my opinion, the timing is wrong for institutional investors and Aston Martin are only trying to squeeze in an IPO before Brexit because they are worried about the consequences for their business. - The CEO has said himself that the timing was because of Brexit.

The guardian has quite a good overview of this.

 

[Coralin96]

It's great to see both sides of this. Like you said @Kazam, great for a commercial awareness discussion at an interview!!

 

[Kazam]

You guys seen this: http://uk.businessinsider.com/aston...elow-offer-1900p-offer-price-on-debut-2018-10

Poor start from aston martin