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Renault selling a R7.4-billion slice of Nissan

Renault and partner Nissan are taking more steps to recast their alliance with the French manufacturer further reducing its stake while pushing on with joint plans in India.

The maker of Megane E-Tech cars plans to offload around 2.5% of its holding in Nissan, expecting proceeds of as much as €362 million (R7.4 billion) that may help with a goal of regaining its investment grade rating, Renault said Wednesday.

Renault last year started loosening ties with its long-time partner Nissan after their alliance had soured over the years.

The French company sold an initial tranche of shares late last year, netting €765 million (R15.5 billion), part of a plan to lower its stake in Nissan to 15% from an initial 43%.

Both companies are also moving ahead with separate partnerships outside of the alliance. Such decisions will serve to strengthen the automotive alliance, which also counts junior partner Mitsubishi, according to Renault Chairman Jean-Dominique Senard.

“When each company draws the future with some partners, every time it will benefit to the other company of the alliance,” Senard said during a press briefing at the companies’ manufacturing plant in the outskirts of Chennai, India, on Wednesday.

“The alliance is the center of this system.”

Since forging a new agreement, Renault has moved away from common structures with Nissan in favor of a new, project-by-project approach to working together, including in India.

The two companies have a market share of less than 2% in India, which has proved a challenge for many foreign manufacturers.

“We still believe in the potential of this market,” Renault Chief Executive Officer Luca de Meo said during the same press briefing, also attended by Nissan CEO Makoto Uchida.

“We also understood we can deliver. We are probably right now in the low point of our life cycle in India.”

Renault and Nissan will invest as much as $700 million (R13.3 billion) to roll out six new models for sale in India as well as export, creating roughly 2,000 additional jobs at the Renault Nissan Technology & Business Center in Chennai.

The Indian operations had a “high level of competence” in areas such as cloud engineering, artificial intelligence and autonomous driving, de Meo said.

Financial Firepower

The sell-down of the holding in Nissan is giving Renault more financial firepower after the company decided to scrap the planned initial public offering of its electric-vehicle and software arm Ampere earlier this year.

Renault and Nissan now have a direct cross-shareholding of 15%, allowing the alliance to continue on more equitable terms. Nissan plans to cancel all of the roughly 100 million shares following the transaction.

The shares to be sold are part of the 24.6% of Nissan capital still held by a French trust, set up as part of the complex untangling of parts of the alliance.

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