France to sell shares in country’s largest companies to aid EDF
The French government is planning to sell shares in some of the country’s largest companies to pay for a €3bn aid package that will help utility EDF build the controversial Hinkley Point nuclear project in the UK.
People close to the discussions say that shares in Renault and Safran are likely to be sold this year, along with the airports in Nice and Lyon, in order to ensure that there will be no extra cost to taxpayers for the investments by the majority-state owned utility group.
This comes as the government last week promised to provide three-quarters of the money for a €4bn capital raise by EDF this year. The group, which has a stretched balance sheet with €37bn in net debt, needs money to pay for a range of costly investments.
This includes the £18bn Hinkley Point nuclear project in the UK as well as an estimated €55bn bill in the coming decade just to increase the lifespan of the country’s 58 nuclear power stations from 40 years to 50 years.
Raising this money presents a challenge to the government, which has already promised to participate in a €5bn capital raising of Areva, another state-controlled nuclear group which has fallen on tough times.
The sales of the airports in Nice and Lyon have already been announced, but two people close to the talks say that the government hopes to raise between €1.5bn and €1.8bn from the two, with Lyon alone hoping to raise as much as €1bn.
Much of the rest could come from Renault, where the state has nearly 20 per cent of the company, say people involved. The state has not yet sold a 5 per cent extra stake it bought last year for €1.2bn to push through a motion on double voting rights.
This 5 per cent stake is currently worth less than what the government paid in April last year, however, meaning it will probably have to wait until the share price recovers before any disposal. At the time of the deal in April, the Renault shares were trading at €88 a share. On Friday, they closed at €85 a share.
The government is also considering selling other parts of its portfolio of 77 companies, such as selling shares in Safran, the aerospace and defence group, where it has a 15.4 per cent stake worth around €3bn, people close to the talks said.
The state, through its holding company APE, owns more than €60bn worth of assets and has investments in 14 listed French groups, including Engie, Orange, Peugeot, Thales and Airbus Group. APE is headed by Martin Vial, who took over the job in August last year.
Earlier this month, the French economy minister Emmanuel Macron said there will be “other operations” by the state on top of selling to airports to raise the €3bn for EDF and the money for Areva as well.
He added that the state’s 14 per cent stake in carmaker Peugeot was worth “several hundred million euros” more than what they paid for in February 2014. This was another deal to bail out a French industrial champion.
One person close to the situation said that the government was not envisioning selling shares in Orange, the telecoms group in which it has a 23 per cent stake.