Renault Cancels Ampere IPO, Shares Rise

Shares of Renault, the French carmaker, experienced a rise on Tuesday following the company's announcement that it would be canceling its plans to list Ampere, its electric-car unit.

At 0823 GMT, Renault shares were up 1.7% at EUR34.90, reaching a high of EUR36.03.

The decision to cancel the initial public offering (IPO) was made due to current market conditions being deemed unsuitable. Analysts and investors had long been skeptical of the IPO, questioning the wisdom of diluting Renault stock and the uncertainty surrounding the demand for electric vehicles.

Jefferies analysts noted that the spinoff's strategy of reducing electric vehicle costs through engineering, software, and manufacturing processes remains solid, along with its funding. They also highlighted that an organic solution avoids distracting management during a critical time for the industry, enhancing management credibility on capital allocation. Additionally, despite the unattractiveness of recent valuations of pure electric vehicles, this decision presents an opportunity for Renault shares to benefit from the low point in negative electric vehicle sentiment.

Bernstein analysts emphasized that keeping Ampere unlisted removes a barrier for current and potential investors. This move will provide a short-term advantage while also allowing a more focused approach on Renault's 2024 guidance in a year with slower growth expectations for electric cars and the auto industry as a whole. However, they predict that sell-side estimates may face pressure in the upcoming weeks.

Renault had initially planned to conduct the IPO this spring.