Renault Abandons Ampere IPO Amid Positive Investor Response

In 2022, Renault had initially announced its intention to proceed with an IPO for Ampere in the first half of 2024.

Renault (RENA.PA) experienced a resurgence in its shares on Tuesday, rebounding from earlier weaknesses as investors absorbed the French carmaker’s decision to abandon plans for an initial public offering (IPO) of its electric vehicle subsidiary, Ampere.

This decision came in response to prevailing stock market conditions.

Several analysts have regarded this move positively, citing its elimination of dilution risks for existing shareholders and the removal of uncertainties regarding valuation, particularly in the face of challenging market circumstances.

In 2022, Renault had initially announced its intention to proceed with an IPO for Ampere in the first half of 2024.

However, in late 2023, the company had cautioned that it might not proceed if the valuation proved to be too low.

Monday’s announcement marked a significant shift in strategy, as Renault expressed confidence in its ability to fund Ampere’s development independently, assuring investors that it would continue supporting the subsidiary until it achieved break-even status by 2025.

Jefferies analysts welcomed the cancellation of the Ampere IPO, seeing it as a favorable development for existing shareholders.

They noted that it minimized the upfront dilution and simplified the investment case, thereby enhancing management’s credibility in terms of capital allocation during a crucial period for the automotive industry.

Berenberg analysts echoed this sentiment, emphasizing that shareholder feedback regarding the potential Ampere IPO had been predominantly negative.

Concerns centered around the anticipated dilution and uncertainties related to valuation, value creation, and value transfer between Ampere, its cornerstone investors, and Renault Group. Renault’s decision to pivot away from the IPO aligns with these concerns.

Furthermore, Renault sought to reassure investors by indicating that “record margins and strong cash generation” were anticipated in the company’s full-year results, scheduled for release on February 15th.

This statement underscores the notion that capital raised from a potential Ampere IPO may now be deemed less necessary, given the company’s robust financial outlook.

Renault’s shares exhibited a notable increase, surging by as much as 5% during early Tuesday trading, although they eventually settled at a 2.4% increase by 1238 GMT.

The decision to abandon the Ampere IPO appears to have provided a renewed sense of confidence among investors, aligning with Renault’s efforts to streamline its strategic focus in response to prevailing market conditions.