(News Bulletin 247) – As of October 1, the last progress update communicated, the portfolio of listed participations held by the State Participation Agency showed an increase of more than 3.6% over the whole of 2024 when the CAC 40 gained only 0.4%. This outperformance is largely explained by Safran and to a lesser extent by Thales.

We sometimes tend to forget it, but the portfolio of listed shares directly managed by the State still represents a significant amount. As of October 1, the date of the last statement communicated by the State Participation Agency (APE), the total market value of this portfolio still represented 51.983 billion euros.

This amount has decreased in recent years due to several operations, such as the sale of blocks of Safran and Engie shares, or the delisting of EDF, which is therefore no longer counted as a listed participation. For simple comparison, in 2014, the APE’s portfolio of listed shares represented approximately 85 billion euros. Some parliamentarians, such as the former Minister of the Interior, Gérald Darmanin, are also raising the idea of ​​selling more stakes in listed companies.

In 2024, this portfolio has so far performed well, based on simple stock prices. As of October 1, it showed an increase of 3.61% over the whole of 2024, a notable outperformance compared to the CAC 40 which for its part was almost stable on the same date (+0.4% ).

How to explain this outperformance? Simple answer: by the fact that the State holds significant stakes in a few companies which have had an excellent vintage. In reality above all one: Saffron.

Safran carries the portfolio

In detail, of the ten companies in which the APE has stakes, five showed a decline between January 1 and October 1, and five recorded an increase.

But Safran, which grew by 31.95% over the period, constitutes the second largest line in the APE portfolio, with a total of 10.32 billion euros, while the State owns around 11.23%. of capital. Only Airbus (11.05 billion euros for a French State stake of 10.8%) is more important in value.

As we wrote in a previous article, Safran actually recorded the biggest increase in the CAC 40 since the start of the year (as of October 1, Schneider Electric has since moved ahead by a narrow head).

The heart of the company’s stock market reactor remains after-sales services (maintenance, overhauls, sales of spare parts). Even if the group does not communicate on their profitability, these services have a good margin. This activity depends on visits by companies and rental companies to the company’s workshops and therefore on air traffic.

In the first half of 2024, civil engine service activities jumped by 29.9%, including “extremely strong growth of 32% in the second quarter”, noted Bank of America. “Although the company has not revised upwards its forecasts for 2024, the fundamentals remain good”, judges Deutsche Bank which is to “keep” on the value for valuation questions. Jefferies also expects the dynamics of after-sales services to remain vigorous in the third quarter, with growth of 19%.

Air France-KLM falls

In terms of other notable increases in the portfolio, Thales, of which the State holds 26.1%, gained 9%. Like many other defense groups, its prices have been supported by geopolitical tensions. FDJ, of which the State owns 21.1% of the capital, took 12.9% on October 1, driven in particular by good half-year results. However, since October 1, the stock has suffered from fears of an increase in tax levies on gambling in France.

On the downside, Airbus is pulling the whole down, with a decline of 7.9% as of October 1. If the aircraft manufacturer is doing much better than Boeing (which lost more than 40% on Wall Street), the aeronautics group issued a heavy profit warning in June. Analysts fear that the company will further lower its forecast for aircraft deliveries for 2024.

Air France-KLM shows the biggest drop of the ten listed companies in which the State is a direct shareholder, with a fall of 38.1% as of October 1. The air transport group was penalized by logistics and labor problems, as well as by an effect of tourists avoiding Paris during the Olympic Games.

Which led it to publish results below expectations in the second quarter. The company also suffered from the rise in oil prices and political uncertainties in France. But, although the State owns 28.08% of the capital, this participation only represents 618 million euros for the APE (because the action has fallen by 83% in five years), and the variation in the price thus has a relatively limited weight.

A different mission

Let us remember that the State shareholder is not intended to invest in companies like a traditional shareholder, who would concentrate on performance. “The State is not a shareholder like any other”, judged the Court of Auditors in a 2017 report.

Sovereignty issues take precedence, and the State thus retains stakes in strategic sectors, such as defense, energy (with Engie) or telecommunications (with Orange).

“The mission of the APE is to manage the State’s portfolio of participations, an equity investor in companies deemed strategic, to stabilize their capital and support them in their development and transformation,” underlines the agency on its site.

The State thus invests along three axes, namely in “strategic” companies which “contribute to the sovereignty” of the country, in companies “in difficulty whose disappearance could lead to a systemic risk”, or in companies “participating in public service missions or national or local general interest for which regulation would be insufficient to preserve public interests and ensure public service missions.

Let us also remember that in addition to the State, public and parapublic organizations own stakes in listed groups. This is the case of Bpifrance, shareholder of Stellantis, Worldline and Eutelsat, and of Caisse des Dépôts et Consignations, present in the capital of Emeis (formerly Orpea), Euronext, Icade, and Compagnie of the Alps.