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The deal makes Saudi Arabia’s PIF a minority shareholder in the group
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Some of the money raised will be used to pay back loan taken out last year
McLaren, a leading UK carmaker, has raised £550 million (US$757 million) fund in a deal that makes Saudi Arabia’s Public Investment Fund a minority shareholder in the supercar and racing group, media reports said.
About £400 million of the latest investment, which was announced on Friday, comes from PIF and Ares Management in the form of preference shares. Both will be minority shareholders following the deal, the reports pointed out.
The UK carmaker has raised more than £1bn in the past two years to help it invest in electric and hybrid cars. Its first entry-level hybrid supercar, the Artura, comes out later in 2021, reported Financial Times.
The company had been in talks since last year to raise about £500m, the FT had reported in December.
A further £150m came from Bahrain’s Mumtalakat, which is an existing investor, as well as new private investors. Some of the money raised will be used to pay back a loan taken out last year during the pandemic. McLaren still has £600m of bonds that mature in the summer.
Kate Ferry, McLaren’s chief financial officer, was quoted saying by the FT on Friday that the deal set the new structure of the business and pushed back any plans of a stock market float into the “medium to long term”.
“This is going to be long-term funding, and it gives us a really good capital structure for the next five years,” she said.
Last year, the group booked a pre-tax loss of £318m, much higher than the £28m a year earlier, after sales halved during 2020.
McLaren is almost unique among luxury brands for its lack of a larger automotive partner, leaving the business to fund new technology from its own resources.
Saudi Arabia’s PIF also has an investment in electric car group Lucid, which floated recently, but Ferry said there had been “no discussion” about technology sharing between the two.
Lamborghini and Bentley are owned by Volkswagen, while Rolls-Royce is owned by BMW, Aston Martin is part-owned by Mercedes-Benz, and Lotus is controlled by China’s Geely.
McLaren, which worked partly with BMW on cells for its hybrid car, is open to other suppliers and partners for future electrical technology.
A major restructuring at McLaren has led to a quarter of jobs being axed, while the company sold off a stake in its racing business to MSP Sports Capital. Ferry said the latest funding meant the company-wide reorganisation was now “done”.
Paul Walsh, McLaren Group’s executive chair, said: “McLaren has taken a number of significant steps to put the company on a stable footing for the long term, with the close support of its advisers and existing shareholders.”