12-14 months to survive? Nissan seeks investor after Renault reduces stake

Renault has decreased its stake in Nissan from 43% in 2002 to 15% in 2023, aligning with Nissan's 15% non-voting stake in Renault

This report has been updated.  Japanese automaker Nissan Motor Co is actively seeking a long-term investor to stabilise its operations during a year marked by declining sales and major restructuring.

 

According to a report by The Financial Times, Nissan is targeting institutional investors, such as banks or insurance companies, to replace part of Renault’s shareholding.

 

Urgency to find an anchor investor has heightened due to increased market pressures, with sources close to Nissan stating that the company may have "12 or 14 months to survive", as quoted in the report.

 

The automaker’s challenges have intensified as its long-time partner Renault continues to reduce its equity stake, further altering the dynamics of their two-decade-old alliance.  A spokesperson from Nissan Motor India told Business Standard, “As a policy we do not comment on speculatory reports." Adding that Nissan remains "committed to its India operations, dealers, partners, and customers."

 

 

Renault-Nissan partnership

Renault rescued Nissan from bankruptcy in 1999, acquiring a 36.8 per cent stake in the Japanese firm. However, since then, while the companies have maintained their individual brands, the two have had a turbulent partnership due to disputes surrounding governance and equity.

 

In 2002, Nissan acquired a 15 per cent share in Renault, and Renault increased its stake in Nissan to 43 per cent.

 

In 2016, the alliance further expanded by incorporating Mitsubishi Motors, forming the Renault–Nissan–Mitsubishi alliance.

 

In 2023, Renault reduced its voting stake in Nissan to 15 per cent, aligning with Nissan's 15 per cent non-voting stake in Renault.

 

Can Honda replace Renault as a stakeholder?

Nissan is reportedly exploring deeper ties with Honda, including the potential sale of shares to the rival Japanese automaker. Though initially deemed a last-resort option, the possibility has gained significance as both companies collaborate on electric vehicle (EV) and software technology to counter increasing competition from Chinese manufacturers.

 

Renault, which has retained a 15 per cent voting stake in Nissan after a recent equity adjustment, has expressed support for stronger collaboration between Nissan and Honda, viewing it as a mutually beneficial move. The French company’s involvement in these discussions, however, remains limited.

 

Nissan's restructuring plans

Nissan’s broader restructuring plans include cutting its 34 per cent stake in alliance partner Mitsubishi Motors to 24 per cent. Mitsubishi, which has competitive strengths in south-east Asia and advanced plug-in hybrid technologies, is also considering new areas of collaboration with Nissan and Honda, although no specific plans have been announced yet.

 

The company is also working on finalising a new EV partnership with Honda while navigating declining sales in China and the United States.

 

Activist investors eye Nissan

Meanwhile, activist investors, including Singapore-based Effissimo Capital Management and Hong Kong’s Oasis Management, have shown interest in Nissan, the report added.

 

Activist investors typically buy significant stakes in struggling companies to influence management decisions, often with the goal of improving profitability or restructuring the business.

 

These firms had previously targeted major companies like Toshiba and Nintendo.