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No IPO of Renault’s electric showcase
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Stock markets and the EV market “not ideal” – De Meo
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Renault has enough cash to finance the activity without IPO
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The investment of Nissan and Mitsubishi was not conditional on the operation, that of Qualcomm was
(Updated with details)
by Gilles Guillaume
Renault RENA.PA announced on Monday the cancellation of the IPO of Ampère, a central pillar of the manufacturer’s transformation strategy, on the grounds that market conditions are not adequate and that it is able to finance its electrical and software subsidiary with its own resources.
The operation, eagerly awaited for the technological showcase of the more than century-old group, was planned for the first half of the year if the context was favorable.
“Renault Group considers that current market conditions are not met to continue the IPO process and best serve the interests of Renault Group, its shareholders and Ampère,” the French car manufacturer said in a press release.
“Given current market conditions and higher than expected cash flow levels, Renault Group has decided to cancel the process,” he added.
During a press conference call, CEO Luca de Meo stressed that the stock markets and the context in the electric market today were “not ideal”.
“Of course it would have been interesting (to do the IPO). But we have the money to move the project forward as it stands without having to go to the market, I think that’s also good news , this means that the machine behind it is working and generating enough cash,” he added.
Renault will publish its annual results on February 15.
Last fall, sources told Reuters that a
slowing demand for electric vehicles, increased Chinese competition and turbulent financial markets against a backdrop of continued geopolitical uncertainties complicated Ampère’s IPO plan.
Several analysts had also cast doubt on Renault’s ability to obtain the expected valuation of up to ten billion euros. Luca de Meo then responded several times that the objective was still an IPO, but not at any price.
AMPERE, RESPONSE TO TESLA
A precursor with Nissan of electric vehicles the previous decade, Renault has since been supplanted by newcomers, pure players in battery vehicles such as Tesla or Chinese brands.
The creation of Ampère last fall should help the group get back into the race by giving better visibility to its electrical and software activities, compared to its historical assets in thermal engines.
Renault, which also has the priority of reducing its credit rating to investment category, clarified that the decision to cancel Ampère’s IPO “has no impact on (its) financial outlook (.. .), nor on its capital allocation strategy.”
It also does not change the commitment of Nissan and Mitsubishi to invest in its electric subsidiary since the agreement concluded with Renault’s two Japanese partners is valid whether or not the IPO takes place, underlined financial director Thierry Pedestrian during the press conference call.
On the other hand, the investment of the American semiconductor giant Qualcomm, Renault’s technological partner, depended on the completion of the IPO.
“We will now have to discuss with them if they want to participate in another way, or if we leave things as they are,” added Thierry Piéton.
The IPO of Ampère would have been a breath of fresh air for the markets after a lean year in 2023 due to the rise in interest rates. The IPO market saw activity last year fall to its lowest level since 2016 and, with rates easing looming, bankers are hoping for a recovery in 2024.
(Report by Gilles Guillaume, with Charlotte Van Campenhout, edited by Nicolas Delame)