Privatization: to finance innovation, the State launches the big destocking
By selling 4.5% of the share capital of Engie, the State has initiated a wave of disposals of its holdings in various companies. Objective: to find 10 billion euros to finance innovation.
The liquidation operation began in Bercy. Two days after the statements of Bruno Le Maire, announcing privatization, the State sold on Tuesday 4.5% of the capital of the energy group Engie. The operation, supervised by the State Investment Agency (APE), will yield 1.53 billion euros. This is the first step in a wave of securities sales to enable the government to raise 10 billion euros to finance an innovation fund.
What are the issues behind the sale of Engie?
The Engie file was the easiest to settle, as the State had a comfortable margin in relation to its obligation to manage the energy company. The law requires it to hold at least a third of the voting rights or the capital of Engie. But thanks to the double voting system introduced by the Florange law of 2014, the State can continue to have one third of the voting rights by holding less than one third of the capital. Bercy still holds 24.1% of the share capital of Engie and 27.6% of the voting rights, thus remaining the main shareholder of the group. "This sale of shares was carried out under very good conditions for the state's patrimonial interests and is the first step in the € 10 billion asset disposal plan", welcomed the Minister of Economy Bruno Le Maire.
It is now that the serious things begin. The State Investment Agency is present in the capital of 81 companies. These shareholdings currently weigh nearly 100 billion euros, 70 of which are in companies listed on the CAC 40. The government therefore has considerable room for maneuver, although it is more limited than it seems: there are shareholdings unsaleable because the stock market price is too low and especially the holdings blocked by the law, which requires the State to hold a certain percentage of shares, as for EDF. In any case, Bercy is well aware that he has to sell because the state is not an excellent shareholder: the value of his stock market has fallen by 30% in six years.
Where can the state let go of some of its actions?
Bercy will therefore have to make arbitrations. Option one: sell a portion of the shares in publicly traded companies. The State is present in the capital of 13 of them. Three of them are untouchable: Safran and Thales for their strategic stake, and Areva, which the State has just recapitalized. The STX case is made complex by the confusion around the sale of the shipyards of Saint-Nazaire to the Italian Fincantieri. Selling shares of Air France-KLM would not be the most lucrative operation: the arrival of the capital of Delta Airlines and China Eastern has diluted the state's share in the airline, and it has only 14% of the shares, ie approximately 500 million euros.
Among the remaining companies, Renault and Orange regularly come back. The state is the largest shareholder of the automaker with nearly 20% of the shares, the equivalent of 4.4 billion euros. The second shareholder, Nissan, owns 15% of Renault's shares, leaving the State a little leeway to let go. The situation is the same for Orange, whose state owns 23% (4.9 billion).
Can there be total privatizations?
These partial divestments in large companies will therefore hardly reach the 10 billion euros. But Bercy has other resources: privatizations. On this point, the sale of Aéroports de Paris (ADP) is credible. The State holds 51% of the capital of the airport platform and a total sale would yield 7.3 billion euros. It is necessary to change the law to go below 50% but this is not really a problem, it has already been done to sell the airports of Nice and Lyon (the procedure is simpler than in the case of EDF, electricity being more strategic than airports). However, the state would prefer to sell to a French shareholder, which restricts the scope of possibilities. The Vinci group, interested by ADP, seems to be a logical choice.
Another potentially juicy cession: La Française des Jeux, not listed on the stock market. It is a mastodon that interests the players very much, so there would be buyers. The government could get a good price (up to 1.4 billion in case of total privatization, more likely a few hundred million) and double the price. Indeed, by privatizing, the State would still still collect the taxes generated by the FDJ: a financial windfall of three billion euros annually.
What does the State intend to do with the money of the transfers?
These asset sales must be used to finance a € 10 billion fund to finance innovation. Established by the State Investment Agency and managed by Bpifrance, this fund will have to yield "200 to 300 million euros of returns per year", according to a source close to the file quoted by Le Parisien. The accumulated billions will be used to financially support start-ups and innovative companies with an ambitious objective: to train new champions in the digital and new technologies, where France lags behind the Anglo-Saxon countries.
Source (in FRENCH): http://www.europe1.fr/economie/privatisations-pour-financer-linnovation-letat-lance-le-grand-destockage-3428915
