France eyes $18b stake sale in Engie, airports, lottery firm
THE MEASURES HOWEVER AREN’T EXPECTED TO PASS PARLIAMENT UNTIL EARLY 2019
The French government will begin laying the groundwork this month for the sale of shares in energy provider Engie, airport operator Aeroports de Paris and lottery company Francaise des Jeux, potentially raising as much as €15 billion (Dh66 billion; $18 billion).
Proposed laws clearing the way for the sales will be presented to the cabinet on Monday, government officials said in a briefing late Tuesday. The measures aren’t expected to pass parliament until early 2019, and the timings and terms of the sales have yet to be decided, they said. The proceeds would go to reducing the state’s debt and bulking up a government fund to invest in innovative technological and industrial projects.
“We’ll decide when the moment comes, but it all depends on market conditions,” Finance Minister Bruno Le Maire said in an interview with Les Echos. “The state’s stakes in these companies represent about €15 billion that are now immobilised and which would allow us to invest in our future.”
For President Emmanuel Macron, the state’s stockholdings give him financial firepower while helping him to live within European Union budgetary rules.
The nation is unusual among big western European countries in that it has a broad portfolio of stakes in publicly traded companies, in addition to closely held businesses such as military shipbuilder DCNS and Francaise des Jeux. While Macron considers investments in defence and nuclear companies to be strategic assets that won’t be sold, others are fair game for divestment.
The bill going before lawmakers would eliminate a requirement for the state to hold more than 50 per cent of ADP and one-third of the voting rights in Engie, both of which are listed on the Paris stock market.
New regulator
In the case of Francaise des Jeux, which isn’t listed, a new gambling regulator must be established before the company can be privatised. The measures won’t be debated in parliament until after the summer holidays.
The government may sell its entire stake in ADP, Vittorio Carelli, an analyst at Santander, said in a report to clients yesterday. He raised his rating on ADP to buy from hold and lifted his price target to €230 from €162.
“We expect the French government to maximise the price through a competitive bid,” he wrote. The final price could be close to €230 a share, he said.
For Engie, “this could well lead to share price volatility,” Emmanuel Retif, an analyst at Raymond James, wrote in a note. “Longer term, the increased liquidity of capital and reduced influence from the French state on the group’s French businesses are positive.”
A €15-billion sale of assets would be a further step in France’s long-term trend of slowly paring its stockholdings. It also would be the biggest wave of divestments by the state since 2004-2007, when France offered shares in its former phone monopoly and held initial public offerings of electric utility of Electricite de France and the gas company now known as Engie.