France expects to raise €15bn from stake sales in Engie, airports

Laws to clear the sales will be presented to the government next week

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.

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 €15bn euros 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 Mr Macron considers investments in defense 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. 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.


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ADP, which is now 50.6 per cent government owned, will be given a 70-year lease on land and management of Paris airports, after which these will revert to the state, a Finance Ministry official said. The government will maintain a veto over sales of the real estate at Orly and Charles De Gaulle airports. The government will also have a right to block any sales of Engie’s strategic gas storage and transport infrastructure, the official said.

Vinci SA, the construction and infrastructure company that owns 8 per cent of ADP, has said it’s interested in increasing its stake should the French state sell shares.

The government may sell its entire stake in ADP, Vittorio Carelli, an analyst at Santander, said in a report to clients Wednesday. 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.