Renault: Car maker Renault abandons Ampere’s IPO

(BFM Bourse) – The automobile manufacturer announced this Monday that it is abandoning the Ampere IPO project.

An about-face for Renault. The Diamond carmaker announced this Monday, January 29, that it is abandoning the IPO of its subsidiary dedicated to electric vehicles and Ampere Software.

The project was launched in 2022, and Renault separated the accounts of this subsidiary last November (meaning it separated them from the rest of the group).

To justify this 180-degree turn, the automaker explains that “current market conditions” are not met. Which in short means, investors were not willing to value Ampere as high as the group wanted.

Luca Di Maio also indicated during the conference call that the group’s stronger-than-expected cash generation prompted management to choose to scrap the proposed listing. “Compared to the assumptions we made two years ago, the cash generation is at a second level that allows us to fully finance, including the expected ‘cash-burn’ in the first 18 months of the project’s life. ‘Ampere,’ he assured .

“As previously announced, Renault Group’s strategic plan, Renolution, is self-financed. The expected results for 2023 confirm the Group’s ability to generate sustainable cash to finance its future (including the development of Ampere)”, Renault also explained.

Incidentally, the group confirmed all the financial objectives announced or confirmed in November during the investor day dedicated to Ampere.

The Renault subsidiary aims to achieve balance in terms of both cash generation and operating margins by 2025.

A contested valuation target

The carmaker decided to undertake this IPO project to crystallize the value, meaning Ampere was better valued by the market with a separate listing on the stock exchange.

Renault’s general director, Luca Di Maio, previously indicated that he was targeting between 8 billion and 10 billion euros for Ampere.

But some analysts were skeptical of such ambitions. If Bernstein reached a valuation of 20 to 30 billion euros, Barclays retained 5 billion euros for its share. UBS went even lower, arriving at an estimate of between 3 and 4 billion.

Nissan and Mitsubishi in the capital

“Ampere’s IPO was a good idea two years ago, when they first mentioned it. As the market situation has completely changed, the market’s enthusiasm for “electric” has diminished. You only have to look at Tesla, which is sinking, with its relentless. A price cut for its electric vehicles”, an analyst explained to BFM bourse two weeks ago.

Tesla has actually experienced a real descent into stock market hell since the start of the year, with its stock down 24% since January 1st. This decline can be explained by several reasons (new price cuts, intense competition in China or production shutdown at its Berlin site). Last week Tesla warned that its growth would slow sharply in 2024, sending its stock down more than 12% in one session.

To return to Renault, the Hira group managed to convince several partners to take a stake, including its Japanese allies Nissan (up to 600 million euros) and Mitsubishi (up to 200 million euros), as well as the American group Qualcomm.

On this last point, Renault’s financial director, Thierry Peyton, explained that the contracts with Nissan and Mitsubishi include clauses that provide for this investment whether Ampere is listed or not. Which is not with Qualcomm that Renault will discuss with.

Julian Marion – ©2024 BFM Bourse