With C$54bn ($40bn) in revenues last year, Magna International, Canada-based automotive systems producer, is probably the largest company you are unfamiliar with – unless you are in the automotive industry. Its clients range from Aston Martin to Ford and just about everyone in between. Its product range is equally diverse, from electronics to chassis, drive trains and seating. The chances are that many – if not most – of the parts of the car you drive were made by Magna.
It manufactures at more than 348 manufacturing sites globally, employing 173,000 people. Ian Simmons, who began his automotive career as a mechanical engineer with Ford in the UK nearly 40 years ago, is charged with running Magna’s “all-tech” venturing strategy, which is designed to keep it in the vanguard of automotive design and manufacturing. And his deals are starting to attract the right sort of attention to Magna.
In March 2018, Magna invested $200m in US-based ride-hailing service Lyft as part of a multi-year strategic collaboration deal.
Founded in 2012, Lyft established itself as the second largest on-demand ride platform in the US, behind Uber, and entered its first international market in Toronto, Canada. The Magna funding valued the company at $11.7bn, according to the Financial Times, and has been a successful financial return following Lyft’s flotation at the end of March.
The partnership would involve the companies making joint investments in the development and manufacturing of autonomous driving systems. Lyft at the time was already working on and testing driverless car technology and has established a dedicated research centre in Silicon Valley.
Magna would bring its expertise on in-car systems, vehicular safety, driver assistance technology and manufacturing to the partnership while Lyft will contribute its existing technology and driver data. They also agreed to share intellectual property.
The investment brought Lyft’s total funding to about $3.8bn, with other shareholders including carmakers General Motors and Jaguar Land Rover, which invested $500m and $25m respectively, and ride-hailing service Didi Chuxing.
Swamy Kotagiri, chief technology officer of Magna, of the deal said at the time: “There is a new mobility landscape emerging and partnerships like this put us at the forefront of this change.
“Lyft’s leadership in ridesharing and Magna’s automotive expertise makes this strategic partnership ideal to effect a positive change as a new transportation ecosystem unfolds.”
A year after the investment, Lyft set the terms for an IPO that would allow Magna, along with co-investors Alphabet, Rakuten, GM, Jaguar Land Rover, Alibaba, Didi Chuxing and Icahn Enterprises to exit, valuing it at up to $22.9bn. The IPO was understood to involve almost 30.8 million shares issued on the Nasdaq Global Select Market priced at $62 to $68 each – the company would raise slightly over $1.9bn in funding if it floated at the foot of its range.
While not a financial-only investor, Magna has already had a positive exit. Israel-based connected automotive security software developer Argus Cyber Security, in November 2017 agreed to an acquisition by automotive components producer Continental.
Financial terms were not disclosed but local media reports last month suggested the deal would value Argus at about $400m having raised about $30m.
In April 2017, US-based automated car technology developer Peloton Technology raised $60m in its series B round including Magna and a host of other strategic and financial investors showing that while the portfolio company connects trucks, Magna led by Simmons in ventures for the past seven years is often the connective tissue between investors.
Simmons had previously been at various roles at Magna Steyr North America in Troy, Michigan since 2003 having joined the company after four years at Porsche.
