(News Bulletin 247) – Several deputies are calling on the State to reduce the size of its portfolio of listed holdings. The executive does not close the door to this possibility.

Should the State shed part of its stakes in companies listed on the stock exchange?

The idea was more than suggested by Gérald Darmanin last week. “Work must be carried out on State stakes in companies. The State has stakes valued at 150 billion euros, including 50 billion in listed companies such as Orange, FDJ, Stellantis or Engie. It would be worth better to sell these holdings than to increase corporate tax. The State has nothing to do there,” the former Minister of the Interior declared to Les Echos.

Gérald Darmanin also persisted in a column co-signed with the former Minister for Tourism and Consumer Affairs Olivia Grégoire and the Renaissance MP Mathieu Lefèvre in La Tribune Dimanche. In this text published on Sunday, the three elected officials call for a sale of around 10% of the State’s holdings. Such an operation would bring in “as much, or even more, than the counterproductive increase in corporate tax or the increase in labor costs planned by the government”, they argue.

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The executive does not rule out the idea

The executive did not close the door to this proposal. This Monday, the Minister of the Economy, Finance and National Sovereignty, Antoine Armand, was questioned by journalists on this subject.

The Bercy tenant first explained that the debate focused on the share portfolio managed by the State Participation Agency (APE). At the end of June 2024, this portfolio amounted to 179.5 billion euros, with 85 companies, ten of which are listed on the stock exchange (for a cumulative value of 50.17 billion euros at the end of June).

“This portfolio is constantly evolving, we are constantly re-evaluating our strategic choices, we are making them evolve within the framework of a medium-term doctrine with more recent developments to be in the best places depending on the portfolio that exists and the strategic interests that are ours,” said Antoine Armand. “The portfolio of State participations has evolved, is constantly evolving, and will evolve,” he assured.

The Minister of Budget and Public Accounts, Laurent Saint-Martin, was a little more forthcoming. On France Inter, the former director general of Business France assured Sunday that he was “never opposed to the debate on the sale of State stakes”.

“The principle of having a portfolio review of State participations and asking ourselves what is the relevance today of these participations does not shock me at all and it does not surprise me that this comes from personalities like Olivia Grégoire and Gérald Darmanin who know these subjects very well and who will be able to address them during the (budgetary) debate,” he added.

To study with regard to the dividend

The State has already reduced its size in the past by selling shares in the aeronautical equipment manufacturer Safran (in 2015 and 2018 for example) or in the energy group Engie (in 2017). The 2019 Pacte law also provided the legal framework for the State to privatize Aéroports de Paris, of which it currently holds 50.4% of the capital. But this operation, made impossible by the health crisis in recent years, represents a significant political risk.

In 2014, the portfolio of listed securities managed by the APE represented 85 billion euros compared to around 52 billion euros at present.

By selling stakes in listed companies, the State could benefit from high sales proceeds quickly. But he “would lose future dividend flows”, recalled on X (ex-Twitter) Vincent Lequertier, head of asset allocation at Wesave and regular guest of News Bulletin 247.

Laurent Saint-Martin agrees. “The question is that we must always weigh it between the sale of shares – which makes it possible to repay the debt rather than reduce the deficit but it is nevertheless an interesting debate – and the shortfall in dividends that this created if you sell your shares,” he declared on France Inter. “We have to look sector by sector, company by company,” he added.

In 2023, the State received a total of 2.34 billion euros in dividends across the entire APE portfolio, including 1.6 billion euros from just the ten listed companies.

Let us remember, however, that the State shareholder obviously does not manage its portfolio like an “ordinary” investor. “The government’s priority is not to receive dividends but to invest in the future,” declared the former Minister of the Economy, Bruno Le Maire, in 2019.

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.