LONDON: Chinese automaker Zhejiang Geely Holding Group Co. has acquired a stake in British luxury carmaker Aston Martin Lagonda Global Holdings Plc, expanding tycoon Li Shufu’s reach into European brands.

Geely bought a 7.6% interest in Aston Martin, according to a statement Friday that didn’t provide a transaction value. Aston Martin also said it had completed a £654 million (RM3.4bil) capital raising to strengthen its balance sheet.

Geely sees potential opportunities to collaborate with Aston Martin, tapping the Chinese company’s technology expertise, according to a statement from Geely Group chief executive officer Donghui Li, suggesting that ties between the automakers will extend beyond the financial investment.

Aston Martin declined to comment on Geely’s investment beyond saying it welcomed the company as a shareholder.

The deal adds intrigue around Aston Martin, which has suffered setbacks on its turnaround plan and previously said it had rejected a proposal by Geely and InvestIndustrial for an equity investment of up to £1.3 billion (RM6.7bil).

At the time, the carmaker claimed the bid didn’t present an “attractive funding option or value creation opportunity for existing shareholders.”

Following the disclosure, Aston’s shares rose as much as 6.6% on Friday but slipped to trade 1.9% lower at 12:25 p.m. in London. Based on Thursday’s closing share price, Geely’s stake is valued at about £66.3 million (RM343mil).

Aston is struggling to deliver on a turnaround plan

Li Shufu, Geely’s billionaire owner, presides over a sprawling automobile empire.

Geely has spent the past decade accumulating a portfolio of foreign car brands from Volvo Car to Group Lotus and London Taxi. The 59-year-old, who has a net worth of around US$14.2 billion (RM66bil), also owns almost 10% of Mercedes-Benz Group AG and 49.9% stake in Malaysia's Proton. Geely in May agreed to buy a 34% stake in Renault SA’s Korean unit.

Li first emerged as a potential investor in Aston Martin as early as January 2020, when people familiar with the matter said Geely had held preliminary discussions about a possible investment.

More recently, Geely has been pushing harder into high tech.

It’s building a presence in low-Earth orbit satellites in the hope they’ll form the backbone of a network designed to one day connect with Geely’s self-driving vehicles, while the company’s joint venture with Chinese Internet giant Baidu Inc. in June unveiled its first artificial-intelligence car.

A Li-controlled company also in June agreed to buy 79% of smartphone maker Meizu Technology Co. from Alibaba Group Holding Ltd., better positioning Geely as cars become more like intelligent mobile devices with wheels.

Aston Martin has been making more headlines for its precarious debt position.

Pitched at the time of its 2018 London listing as a peer to Ferrari NV, the carmaker was forced in 2020 to seek a rescue by Canadian billionaire Lawrence Stroll, who injected cash and forged closer ties with Mercedes. That wasn’t enough.

Just months after Stroll declared that Aston had plenty of cash, the carmaker announced the latest rights issue along with the enlisting of the Saudi Public Investment Fund as a major shareholder.

Its capital raising will still leave the company with “an excessive level of debt given its terrible track record of profitability and free cash flow generation,” analyst Thomas Besson wrote in a note earlier this month.

Shares in Aston Martin have declined 74% this year.

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