Renault targets $14b valuation for standalone EV business

PARIS – Renault is aiming for a roughly €10 billion (S$14 billion) valuation for the electric vehicle (EV) business it is carving out as a standalone entity, according to a person familiar with the matter.

The French carmarker is preparing the EV and software entity for a potential initial public offering on the Euronext Paris exchange some time in 2023, said the person, who asked not to be identified because the information is private and plans could still change.

The carve-out of the entity, dubbed Ampere, is part of an overhaul that chief executive officer Luca de Meo will present to investors in the coming week. The split of the EV business from Renault’s traditional combustion-engine operations comes as the maker of Zoe and Clio cars seeks to navigate a difficult transition to EVs as a possible recession looms in Europe.

Renault will brief investors about its revamp plans, which are still being finalised, during a capital markets day on Tuesday. A spokesman declined to comment.

Ampere’s carve-out has been at the heart of talks between Renault and Japanese partner Nissan Motor as the two companies seek to reshape a two-decade-old alliance.

Nissan may invest US$500 million to US$750 million (S$700 million to S$1.05 billion) for a stake of about 15 per cent in Ampere, but the agreement hinges on a wider deal that would see Renault lower its own 43 per cent stake in Nissan to about 15 per cent over time to rebalance the alliance, people familiar with the situation said. 

The talks are ongoing and valuation of Ampere has been among sticking points in the Nissan discussions, which have also hit snags over intellectual property concerns. Renault is currently worth €9 billion and it may be tricky for the carmaker to obtain a valuation for Ampere that is higher than its own market capitalisation.

The IPO would be subject to market conditions, the person familiar with the situation said. Turbulence in share prices has put a damper on new offerings.

Mr de Meo also will be giving details this week on Renault’s legacy combustion-engine business, dubbed Horse, which also is being carved out. Renault may announce a deal with China’s Zheijiang Geely Holding Group for 50-50 ownership of Horse until other investors make further investments, two people familiar with the talks said.

Ampere will be based in France and employ about 10,000 people. The Horse entity with Geely would be based outside of France and also have a staff strength of about 10,000. 

The French government, which owns 15 per cent of Renault, has been briefed in detail about the plans, one person said.

The separation of the two businesses is likely to lead to “a better capital allocation and eventually to improved shareholder returns”, Stifel analyst Pierre-Yves Quemener wrote in a note in November. BLOOMBERG