(News Bulletin 247) – The automobile manufacturer announced this Monday the abandonment of the Ampere IPO project.

About-face for Renault. The diamond car manufacturer announced this Monday, January 29 that it was abandoning the IPO of its subsidiary dedicated to electric vehicles and Ampere software.

This project was launched in 2022, and Renault had segregated the accounts of this subsidiary (that is to say, it isolated them from the rest of the group) last November.

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

Luca de Meo also indicated during a conference call that the group’s stronger than expected cash generation had also prompted management to choose to cancel this proposed listing. “Compared to the assumptions we made two years ago, cash generation is at another level which allows us to finance ourselves completely, including the ‘cash-burn’ expected over the first 18 months of life of the project. ‘Ampere,’ he assured.

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

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

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

A contested valuation target

The car manufacturer had decided to carry out this IPO project to crystallize value, that is to say that Ampere would have been better valued by the market with a separate listing on the stock exchange than without.

The general director of Renault, Luca de Meo, had previously indicated that he was targeting between 8 billion and 10 billion euros in capitalization for Ampere.

But several analysts had expressed doubts about such ambitions. If Bernstein arrived at an valuation of between 20 and 30 billion euros, Barclays for its part retained 5 billion euros. UBS went even lower, arriving at an estimate of between 3 and 4 billion.

Nissan and Mitsubishi in the capital

“The IPO of Ampere was a good idea two years ago, when they first mentioned it. Since the market conditions have completely changed, the market’s enthusiasm has fallen for the “electric. You only have to see Tesla which is plunging, with its incessant price reductions for its electric vehicles”, explained an analyst to News Bulletin 247 two weeks ago.

Tesla has indeed 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 many reasons (new price reductions, fierce competition in China or even the cessation of production at its Berlin site). Last week Tesla warned that its growth in 2024 would slow down sharply, which caused its stock to plunge by more than 12% in one session.

To return to Renault, the diamond group had 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 Piéton, explained that the agreements with Nissan and Mitsubishi included clauses which provided for this investment whether Ampere was listed or not. Which is not the case with Qualcomm with whom Renault will discuss.