UPDATE 2-Aston Martin gains capital injection and strengthens Mercedes link

(Adds detail on Mercedes involvement)

Oct 28 (Reuters) - Aston Martin’s 125 million pound ($163 million) capital increase has been fully subscribed, the loss-making carmaker said on Wednesday as it seeks to turn round the business with additional support from Daimler.

Shares in the company jumped as much as 12.8% after it said late on Tuesday that Daimler’s Mercedes-Benz would lift its stake in the British carmaker to up to 20% by 2023.

Mercedes will not put up any cash but will be given the shares in exchange for expanding an existing supply agreement, allowing Aston Martin to access key Mercedes technology, including hybrid and electric drive systems.

The German carmaker, which already had a 2.6% holding in Aston Martin, said the deepened partnership would result in further sales of its components and systems, as well as the potential upside of any increase in the value of the stake.

Former Mercedes CEO Tobias Moers took charge of struggling Aston Martin at the start of August.

In Tuesday night’s statement, the British company said it was targeting production volumes of about 10,000 vehicles, revenue of about 2 billion pounds and adjusted core profit of 500 million pounds by its 2024 or 2025 financial years.

The company sold around 5,860 vehicles last year, bringing in revenue of nearly 1 billion pounds with core profit of 134 million pounds.

“With a strong industrial partner in Mercedes, it has a decent chance at success. And if it does succeed, maybe it will create some value for Daimler shareholders too,” Bernstein analysts said in a note.

Aston Martin, known for being James Bond’s carmaker of choice, has suffered a torrid time since it floated two years ago, with its shares losing two thirds of their value this year.

A consortium led by Canadian billionaire and Formula One team owner Lawrence Stroll became the largest investor in the company in January. ($1 = 0.7673 pounds)

Reporting by Tanishaa Nadkar in Bengaluru Writing by Keith Weir Editing by Aditya Soni and David Goodman