© Reuters. FILE PHOTO: The Renault logo seen on the trunk of the new Kwid advanced car during a launch event in New Delhi, India January 9, 2024. REUTERS/Sahiba Chawdhary/File Photo
PARIS (Reuters) – Renault shares rose again on Tuesday, recovering from earlier weakness as investors digested the French carmaker’s decision to abandon plans to list its Ampere electric vehicle arm due to conditions stock exchanges.
Several analysts said they viewed the news of the IPO abandonment as positive, noting that it removed dilution risk for current shareholders and valuation uncertainty amid a difficult market environment.
Renault (EPA:) had also said on Monday that it had enough liquidity to avoid listing on the stock exchange and that it would continue to finance the development of Ampère until it reached the break-even point in 2025 .
In 2022, Renault announced its intention to proceed with the IPO of Ampère in the first half of 2024, but warned at the end of 2023 that it would not proceed if the valuation was too low.
“The cancellation of Ampère’s IPO should be positive for current shareholders as it minimizes initial dilution…and removes a layer of complexity in the investment case,” analysts at Jefferies in a note.
“An organic solution also avoids distracting management at a critical time for the industry and strengthens management’s credibility in capital allocation,” they added.
Renault shares rose as much as 5% in early trading Tuesday before falling. Shares were up 2.4% at 1238 GMT.
Berenberg analysts said the Ampere IPO turnaround could be seen as positive as “shareholder feedback on Ampere’s potential IPO was generally negative, highlighting the likely dilution and uncertainties regarding valuation, value creation and value transfer between Ampere, the division’s main investors. and the Renault group.
They also noted that Renault had highlighted that “record margins and strong cash generation are expected to be delivered when the company publishes its annual results on February 15… This makes the capital raised in a possible IPO on the Ampère stock market less necessary”.