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
Can Hamilton produce another Singapore magic moment? Plus

Can Hamilton produce another Singapore magic moment?

The Singapore Grand Prix has, explains BEN EDWARDS, played an important role in Lewis Hamilton’s Formula 1 career. As the series returns to the Marina Bay Street Circuit for the first time in three years, he faces the latest challenge with an underperforming Mercedes car

Why Sainz is key to Ferrari achieving its chairman's F1 goals Plus

Why Sainz is key to Ferrari achieving its chairman's F1 goals

Although Ferrari's chances of title glory in 2022 have evaporated, chairman John Elkann expects the team to have chalked up both championships by 2026. Both require drivers to play the team game and, having now become more comfortable with the F1-75, Carlos Sainz may be Ferrari's key to title glory

Formula 1
Sep 27, 2022
How F1 has tried to avoid repeating its 2014 engine rules mistakes Plus

How F1 has tried to avoid repeating its 2014 engine rules mistakes

With Formula 1’s future engine regulations now agreed, MARK GALLAGHER wonders if they will provide a more competitive field than past attempts actually managed

Formula 1
Sep 26, 2022
How its faltering first turbo car advanced a Williams-Honda glory era Plus

How its faltering first turbo car advanced a Williams-Honda glory era

STUART CODLING charts the development of the Williams FW09, the ugly duckling that heralded the start of the title-winning Williams-Honda partnership

Formula 1
Sep 25, 2022
The Moss-Ferrari farce that current F1 drivers are thankfully spared Plus

The Moss-Ferrari farce that current F1 drivers are thankfully spared

Recent moves within the driver market have reminded MAURICE HAMILTON of a time when contracts weren’t worth the paper they weren’t written on…

Formula 1
Sep 24, 2022
Audi’s innovative first assault on grand prix racing Plus

Audi’s innovative first assault on grand prix racing

It has been a long time coming but Audi’s arrival in Formula 1 is finally on the horizon for 2026. But it won’t be its first foray into grand prix racing, as the German manufacturer giant has a history both long and enthralling

Formula 1
Sep 23, 2022
The seven factors powering Verstappen's 2022 F1 domination Plus

The seven factors powering Verstappen's 2022 F1 domination

After a tooth and nail and, at times, toxic Formula 1 world championship scrap last year, Max Verstappen's march to a second consecutive title has been the exact opposite. But has he really changed in 2022? Here's a dive into what factors have played a crucial role, both inside the Verstappen camp and elsewhere, in the Dutch driver's domination

Formula 1
Sep 23, 2022
Why Hamilton is still the man to keep driving Mercedes forward Plus

Why Hamilton is still the man to keep driving Mercedes forward

Lewis Hamilton’s words in a recent Vanity Fair interview define both his world-view and his approach to this season: one of perpetual struggle against adversity. As GP RACING explains, that’s what Lewis feeds off – and why, far from being down and nearly out, he’s using his unique skillset to spearhead Mercedes’ revival…

Formula 1
Sep 22, 2022