PARIS: Renault SA scrapped plans to list its electric-vehicle business, reversing course due to a lack of appetite for share sales amid a slowdown in EV demand.
The French maker of the Twingo and Megane E-Tech cited unfavorable market conditions and said its stronger cash generation eliminated the need for new funding of the EV and software entity, called Ampere.
Chief executive officer Luca de Meo was seeking a valuation of €8 billion ($8.7 billion) to €10 billion for the business, almost as much as Renault’s €10.1 billion market value.
Renault wanted to list Ampere during the first half of the year, though the timetable had already been pushed back once.
The global market for initial public offerings sank last year to its worst levels in over a decade, according to data compiled by Bloomberg, owing to the surge in interest rates.
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.
The scrapping of the Ampere IPO comes less than a week after Tesla Inc. forecast a "notably lower” growth rate this year, which sent its shares tumbling to an eight-month low.
‘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.
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.
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.”
De Meo also 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.
