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France's Renault scraps IPO of EV business Ampere

Published 01/29/2024, 01:09 PM
Updated 01/29/2024, 03:21 PM
© Reuters. A man walks past a logo of Ampere during Renault Group capital market day for its new electric vehicle unit Ampere, in Paris, France, November 15, 2023. REUTERS/Gonzalo Fuentes/File Photo

By Gilles Guillaume and Charlotte Van Campenhout

PARIS (Reuters) -Renault on Monday ditched plans to list its electric vehicle business Ampere because of sluggish stock market conditions.

In September, Luca de Meo, CEO of both the Renault (EPA:RENA) Group and Ampere, said the IPO could be worth up to 10 billion euros.

EV demand in Europe has weakened and the region's carmakers face stiff competition from Chinese rivals.

The IPO sought to extract more value from the business by giving Ampere more visibility and separating it from the combustion engine business, called Horse.

Renault emphasised it had enough cash to do without the IPO.

"Today, we took a pragmatic decision. We are all focused on executing our strategy and building our track record to create value for all our stakeholders," said de Meo.

In a statement the Renault Group said it would continue to fund the development of Ampere until it reaches break-even in 2025.

"Renault Group strategic plan, Renaulution, is self-funded and the results which will be released for 2023 confirm the group’s ability to generate sustainable cash flow to finance its future (including Ampere development)," the statement added.

"Considering both current equity market conditions and stronger cash generation, Renault Group has decided to cancel the Ampere IPO process."

In 2022, the company announced its intention to proceed with an IPO for Ampere in the first half of 2024 but said in late 2023 that it would not go ahead if the valuation was too low.

In December, Renault's longstanding alliance partners Nissan (OTC:NSANY) and Mitsubishi confirmed plans to invest in Ampere.

Renault reiterated on Monday that these companies were interested in investing in Ampere even if the company did not proceed with an IPO.

Chip maker Qualcomm (NASDAQ:QCOM) was also expected to invest in Ampere but its investment hinged on the IPO taking place.

"We'll have to discuss with them if they want to participate in some other shape or form, or if we keep it the way it is," Renault's CFO Thierry Pieton told journalists on a conference call.

Reuters reported in November that weaker EV demand, increased competition from China and market volatility were complicating Renault's plans to list Ampere.

The listing would have been a bright spot for the stock market after a poor 2023 due to rising interest rates.

© Reuters. FILE PHOTO: A new Renault Twingo electric car is unveiled during Renault Group capital market day for its new electric vehicle unit Ampere, in Paris, France, November 15, 2023. REUTERS/Gonzalo Fuentes/File Photo

Last year's IPO market had the lowest levels of activity since 2016, but bankers had hoped for a potential revival if borrowing rates started to fall.

($1 = 0.9249 euros)

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