Stake frites
* Sale of public stakes: on the agenda of the main reformist candidates Emmanuel Macron proposes to partly finance a EUR10bn fund dedicated to innovation and industry by selling public stakes in French companies. François Fillon plans to accelerate the sale of the State’s holdings in different companies, keeping only those he deems “strategic”. Marine Le Pen has announced she would like a mix of nationalisation and divestments. Benoît Hamon and Jean-Luc Mélenchon would rather increase the size of public stakes in French companies, although, based on current polls, they are less likely to be elected.
* State’s portfolio likely to focus more on strategic assets It is very unlikely that any candidate will trigger a sale of stakes in companies in which the French State has strategic interests. This is particularly the case in defence and aerospace. That said, the lacklustre performance of the State’s shareholding portfolio in the past and the desire to protect strategic interests also highlight the need for a more efficient management of the State’s portfolio.
* Infra, telecom, transport, electronics and energy holdings most likely divestment candidates We expect a movement on ADP’s capital in the next 12-18 months and BPI to fully exit its Eiffage stake. We think a stake sale of Air France-KLM would be unlikely to be seen as giving up the crown jewels; a divestment of PSA would make sense for the next government given the significant profit (>100%) the investment has generated. We also believe the State is likely to consider disposing part of its stake in Orange while maintaining its level of influence via the double voting rights mechanism and the regulatory authorities. We also think STMicroelectronics and TechnipFMC may not be as strategic as they once were for the French government. Finally, the government’s lack of influence over ENGIE may eventually prompt it to reassess its holding.
* A detailed analysis on all listed companies partly held by the French government We assess for each company the likelihood of public stakes being sold over the coming five-year Presidential mandate. Our analysts lay out the current political and financial context for each stock and consider what the State could do with its holdings.