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Consider the options. Renault sold 228,000 electric and hybrid vehicles in Europe last year. This puts the French car manufacturer in third place in terms of market share.
Ampere's IPO could raise between 1 and 2 billion euros through the sale of shares. But is a deal really necessary? Renault wants to accelerate its growth. Bernstein's Dan Roeska says he has enough money to meet Ampère's needs for years, around 4 to 5 billion euros.
The German company ThyssenKrupp is in a different boat. He would like to bring his Nucera hydrogen plant to water. The parent company does not have enough capital to properly develop the business.
Lex estimates Nucera's cell capacity is 1 GW per year. Very noisy. However, it takes time to make a profit, and competition is bound to increase.
The parent company wants to simplify its structure and decarbonize other capital-intensive activities, including steel production. He could use all the money he raised. Thyssenkrupp's joint stake in Nucera could be worth 2 billion euros.
At the same time, a successful IPO can offer the smaller business unit the opportunity to grow organically. Competition for capital within a conglomerate is complex. CFOs prefer quick payback sales.
Italian energy group Eni is looking to expand its Plénitude renewable energy business in part through acquisitions and believes the share currency will help. So far, the markets have not accepted the idea of a spin-off. Annie can try again. TotalEnergies and BP, both with in-house renewables divisions, would be interested.
We have missed the reason for establishing transmission companies: a business opportunity. Leadership ambition and fun activities are real factors. It seems that Renault uses not only strategic logic. Ultimately, Ampere may be more valuable to its parent company as a subsidiary than as a spin-off.
Lex is a short daily FT column. Expert writers from four of the world's financial centers provide compelling and up-to-date insights into trends in capital and big business. Click to view