Future sell-offs in doubt despite Loto share success

The partial privatisation of the lottery monopoly Française des Jeux last November has been judged a success.

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It has, however, raised questions about whether further privatisations, in particular of Groupe ADP – the new name for Aéroports de Paris– and the electricity, water and gas company Engie (the new name for Suez) will take place.

Opponents of ADP’s privatisation launched an online petition against it which, by February 3, had reached 1,027,228 signatures.

If it reaches four million signatures by April, the privatisation plans will be put to a national referendum.

Antoine Denry, director of strategy at Hill+Knowlton Strategies in Paris, said: “It is difficult to see how the ADP plans can go ahead now with so much opposition.

“Even if the four-million mark is not reached, after a certain level of opposition is apparent, it will not make sense to force the issue.”

Over at Engie, the end of 2019 was full of rumours that managing director Isabelle Kocher, the only woman to head a CAC 40 company, would be sacked by the board before her term is due to expire in May.

The government has said it wants to reduce its 24% stake in the company by selling to institutional investors.

Unions came to Ms Kocher’s assistance, saying those who wanted to see her out also wanted to break up the company to make selling it easier.

Government sources told French media that they had “calmed the playground” and Ms Kocher will serve out her mandate, but she is unlikely to get a second one.

Her supporters point to the strong financial results obtained by the company since she took over in 2016.

“Although Engie is not likely to raise as much passion as ADP, because institutional investors already have three-quarters of the company, there are signs that the privatisation is being questioned,” said Mr Denry.

“Nearly everywhere else in Europe, governments are trying to build state industrial policies because the feeling is that leaving it all to the markets was not a success, especially since the crisis of 2010. The French government too has said it wants an industrial strategy and this does not sit well with privatising Engie.”

The Française des Jeux (FDJ) privatisation was well done and popular, according to Mr Denry.

“The timing was perfect, between the winding down of the gilets jaunes protests and the start of the rail strike, so people were optimistic,” he said.

A million individuals bought shares, and the part reserved for institutional investors was oversubscribed.

In all, the state gained €2.1billion, most of which it says will be used to pay for an annual €250million fund to finance innovative technology.

Investors saw shares shoot up 14% on the first day of trading, and then rise further to settle at around 20% more than the launch price.

As well as being offered a 2% discount on the launch price, individual investors will get one free share for every 10 bought if they keep them for two years.

“It is likely that people who have never owned shares before now do,” said Mr Denry. “But French people remember stock market disasters more clearly than the good times.”

One of the largest disasters is the bank Natixis, which entered the stock market in 2006 at a price of €19.55.

Many share-buyers were customers of Caisse d’Epargne and Banque Populaire, then independent co-operative banks, which merged investment banking divisions to form Natixis.

Many long-term savers, a lot of whom had never owned shares before, were encouraged to empty their accounts to buy Natixis shares.

By 2009, the share price had fallen to €1, leading to some people who claimed they were pushed into buying shares launching legal proceedings.

Today Natixis trades at around the €4 mark.