French Government Cuts Stake in Renault

The French government will raise about 1.3 billion euros from selling part of its holding in Renault in a move seen boosting long term sentiment in shares of the French carmaker.

French Government Cuts Stake in Renault

The French government will raise about 1.3 billion euros from selling part of its holding in Renault in a move seen boosting long term sentiment in shares of the French carmaker.

Bankers handling the sale said the French government would sell about 8.5 percent of Europe's fourth biggest automaker through the open market. After the placement and a subsequent offering to employees, the French state will own about 15 percent of Renault's capital.

The move was viewed positively by equity analysts as it will boost Renault's freefloat and thus make it more liquid. The French government, which appeared to time the sale to take advantage of a recent rally in Renault's share price, said it would retain its current stake for now.

"We intend to keep our 15 percent stake in the short to medium term. We think the state's holding will contribute to the stability of the Renault shares," said a spokesman for the Economics and Finance Ministry.

At 1013 GMT, Renault shares were trading one percent lower at 49.31 euros on pressure from the placement, against a slightly higher autos sector. But dealers said the books were covered, meaning the bankers had found buyers for all the shares.

Long Term Gain

Analysts were upbeat about the longer-term effects.

"It is very good news. The government has lifted the lid on the stock which means it will be able to reach its potential," said Patrice Solaro, auto analyst at Julius Baer.

"The share had risked being capped at about 50 euros but now it has upside to around 60 euros," he added.

Renault is banking on new models including its new Megane and Scenic minivan to boost operating profits in the next year or so and several analysts see momentum shifting to Renault's favour from previous sector favourite and domestic rival PSA Peugeot-Citroen.

Renault's stock has risen over 30 percent in the last two months, outperforming the auto sector and PSA's shares.

Renault last week saw its operating profit sink by over a third in the first half although its bottom line, or net profit, jumped 32 percent, boosted by a generous contribution from its Japanese partner Nissan.

JP Morgan is acting as the global coordinator of the sale of 24.2 million shares, alongside Societe Generale and Deutsche Bank, which are the bookrunners.

JP Morgan said in a statement the shares were being offered to institutional investors outside the United States at a price between 48.65 and 49.15 euros per share in an accelerated bookbuild.

An accelerated bookbuild is a swift auction of shares among professional investors orchestrated by an investment bank. Pricing is usually decided at the end of the auction. The offering size may be increased by another 2.4 million shares if demand is strong.

shares
comments
Irvine backs Wilson for Jaguar stardom
Previous article

Irvine backs Wilson for Jaguar stardom

Next article

Germany Preview Quotes: Renault

Germany Preview Quotes: Renault
How BRM's one-off F1 double defied its rollercoaster history Plus

How BRM's one-off F1 double defied its rollercoaster history

It’s 60 years since BRM achieved its goal and Graham Hill led the team to a world title double. But that was just part of the remarkable story of a unique team that at times overstretched its resources and had its fair share of disappointments

The bold F1 DRS experiment that could end the debate forever Plus

The bold F1 DRS experiment that could end the debate forever

OPINION: The effectiveness of DRS in Formula 1 remains a topic of debate as the winter break gives a chance for reflection on the racing we saw in 2022. For all of its detractors, perhaps an experiment where DRS is cast aside and the impact this has on racing is in order to truly understand its merits in modern F1

The sliding doors moment that saved Red Bull and Porsche Plus

The sliding doors moment that saved Red Bull and Porsche

OPINION: Everything looked set for Red Bull and Porsche to join forces for the 2026 season, before the marriage between both parties was called off. While at the time it looked like a major coup for Formula 1 in gaining both VW Group powerhouses Audi and Porsche for 2026, Red Bull and Porsche have really been spared a potentially fractious relationship.

Formula 1
Dec 7, 2022
How Tyrrell’s post-Stewart era descended into a fight to survive Plus

How Tyrrell’s post-Stewart era descended into a fight to survive

Glory days for Tyrrell became increasingly infrequent
 after Jackie Stewart’s retirement. But in the latest instalment of his history of the team for Autosport's sister title GP Racing, 
MAURICE HAMILTON recalls how Ken Tyrrell’s plucky and defiantly small team stayed bold enough to innovate – springing a surprise with F1’s first six-wheeled car

Formula 1
Dec 6, 2022
The forgettable final car of a former F1 giant that gave Damon Hill his start Plus

The forgettable final car of a former F1 giant that gave Damon Hill his start

While it launched the F1 career 
of a future world champion, STUART CODLING recalls that the BT60 was also the final nail in the coffin of a once-great marque 30 years ago. Here is its story

Formula 1
Dec 5, 2022
How departing F1 boss Brawn views F1’s new rules - and the future Plus

How departing F1 boss Brawn views F1’s new rules - and the future

Multiple-title-winning designer and team boss Ross Brawn is finally leaving Formula 1 after nearly 50 years in motorsport. But he still has plenty of insights on what’s working and what comes next, as he revealed to Autosport in a far-reaching exclusive interview in Abu Dhabi

Formula 1
Dec 2, 2022
The key F1 management call Ferrari must make to avoid more defeat Plus

The key F1 management call Ferrari must make to avoid more defeat

OPINION: Mattia Binotto’s departure from Ferrari will naturally bring a range of changes across the Formula 1 team. But how the changes shape up and the impact they could have is set to be dictated by a key direction Ferrari’s top dogs will need to pick

Formula 1
Nov 30, 2022
The difference between Mercedes’ stumble and the fall of F1 giants Plus

The difference between Mercedes’ stumble and the fall of F1 giants

OPINION: Mercedes endured its worst season of the hybrid Formula 1 era, but was mercifully spared its first winless campaign in over a decade late on. It has owned up to the mistakes it made which led to its troubled W13. And while its task to return to title-challenging contention is not small, its 2022 season seems more like a blip than the beginning of a downward spiral.

Formula 1
Nov 29, 2022