(Bloomberg) — Renault SA rose after scrapping plans to list its electric-vehicle business, reversing course on what would have been one of Europe’s biggest initial public offerings this year.
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The French maker of the Twingo and Megane E-Tech said unfavorable markets for listings led to the decision, though slower-than-expected EV demand also played a role. The shares rose as much as 5%, trimming losses over the past year to 3%.
Chief Executive Officer Luca de Meo was seeking a valuation of €8 billion ($8.7 billion) to €10 billion for the EV and software business, known as Ampere, almost as much as Renault’s €10.1 billion market value. De Meo, who has led a turnaround of the company, also said improved cash generation meant extra funding from a share sale was no longer needed.
European IPO markets have been in doldrums for the last two years, with the region’s proceeds from new listings down by more than a third in 2023. The Ampere offering, expected to be one of the biggest IPOs of this year, was seen as a possible turning point.
The move was intended to be part of a complex overhaul separating battery-powered car production from Renault’s legacy internal combustion-engine arm. Demand for EVs has cooled, with a number of carmakers pushing back rollouts of new models and rental firms paring purchases for their fleets.
“Is the context influencing the decision? It’s one of the elements,” de Meo told reporters and analysts during a call late Monday. “Being totally blind and not looking left and right would’ve been not been responsible.”
Read More: Renault Casts EV Business Ampere as Europe’s Answer to Tesla
Carmakers are feeling the pinch from a price war kicked off by Tesla Inc. and broad rollback of buying incentives that has seen uptake trail expectations. BloombergNEF still expects global passenger EV sales to rise 21% this year, with 70% of those being fully electric.
The scrapping of the Ampere IPO comes less than a week after Tesla forecast a “notably lower” growth rate this year, which sent its shares tumbling to an eight-month low. Renault’s stock has whipsawed over the past months.
‘Market Feedback’
“We didn’t think the IPO made much sense to begin with,” said Bernstein automotive analyst Daniel Roeska. “The decision shows that Renault is willing to adapt the execution of its strategic plan and is listening to market feedback.”
In October, the analyst wrote an open letter to Renault management urging them to reconsider the IPO.
Renault had no plans to sell Ampere at a discount, De Meo told Bloomberg in an interview in November. The company said Monday that keeping Ampere provides greater flexibility, and De Meo described the about-face as “pragmatic.”
“We have the money to push the project as it is, without having to go to the market,” he told reporters and analysts on a call late Monday. “I think it’s also good news, it tells you that the machine is working, it’s generating enough cash.”
Renault will have discussions with its Japanese partners Nissan and Mitsubishi Motors about their plans with Ampere. Nissan had expressed the wish to potentially be able to invest irrespective of an IPO, Renault Chief Financial Officer Thierry Pieton said late Monday.
De Meo said Renault has held talks with other carmakers on possibly sharing platforms for EV development, a move that could help Europe’s industry compete with an influx of cheaper Chinese battery-powered cars. But he said there’s no link between those talks and the decision to scrap the Ampere IPO.
—With assistance from Alexandra Muller, Thyagaraju Adinarayan and Tsuyoshi Inajima.
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