Friday, December 2, 2016

What future for the State as a shareholder: five questions on privatisation – South West

Chow to raise public investment when it is in debt? Through privatization, ” said François Fillon, who promised to leave the State enterprises where it is not “necessary” in the event of victory in the presidential election. A project in theory possible, which is however confronted with several obstacles. The point for five questions

That has the State today?

The French State is now with a capital of 81 companies, through the Agency of the interests of the State (EPA). The value of its portfolio was at the end of April near $ 90 billion, of which eur 62,8 billion in listed companies. Among the companies concerned are to be found several heavy weights of the CAC 40, such as Orange, Airbus and PSA.

The SNCF, of which the State is 100% shareholder has been making contribution to save the Belfort site.© Photograph Archives Stephane Lartigue

the amount of The dividends is, however, variable: the State owns 32.8% of capital Engie, 19.7% of Renault, but 85.3 per cent of EDF and 100% of the SNCF.

What are the last privatisation?

“The privatisations that have never been arrétées the last thirty years,” observes Elie Cohen, economist at the CNRS, who recalls that the State has recently disengaged from the airports of Toulouse and Nice.

The portfolio of the State shareholder is expected to increase next year with the bail-out of EDF and Areva, in the throes of financial difficulties, which will be offset only in part by new sales.

What are the transfers available?

According to François Fillon, “the State does not intend to remain permanently in capital of the companies which are in the commercial sector, in the competitive sector”. ADP, Engie, Orange… ” On the paper, several enterprises could be sold without that this gives rise to tragedies appalling because they are strong enough to function without the support of the State,” said Henri Sterdyniak, economist at the OFCE. “The question is at what price and who to sell? “

The French State became a shareholder of PSA in 2014, at the same time that the chinese group Dongfeng© Photograph AFP ERIC PIERMONT

To Philippe Aghion, professor at the Collège de France, “there is no reason that there is a public participation” in companies like the Shipyards of the Atlantic, or Renault. The State was also mounted in the capital of Peugeot (14%) in 2014, while the builder was in a very bad position. The following year, he ascended to the capital of the renault brand, while ensuring that this was only temporary. But the fluctuations of the Stock prices, in the wake of the case of Volkswagen, have pushed to postpone the resale of the securities.

What are the obstacles?

A number of enterprises cannot be managed on only financial criteria,”becausethey play a strategic role” to the image of EDF, ” observes Henri Sterdyniak. And even if some companies don’t have a strategic interest particular, it is necessary to ask whether in giving up his participation, the State is not likely to see spend some florets under a foreign flag, ” says Dr. Cohen.

Another problem: that of the stock Exchange. “ It is necessary to sell well,” in other words, at a good price, should be Philippe Aghion. The value of the quoted portfolio of the EPAS, which comprises 13 companies, has fallen by 23% in 2015 due to the collapse of energy values, making it less timely disposal of certain investments.

on the other hand, for companies such as the SNCF or the Post, ” there arees risks of social conflict obvious,” remarks Henri Sterdyniak.

Relaunch the privatization-does it make economic sense?

Philippe Aghion responded favourably if one adopts the point of view of the companies. The groups have “in need of long-term objectives. or when the State gets involved, it introduces considerations of the short-term,” says the economist, citing the case of the SNCF, making contribution to save the Belfort site.

the selling price of The motorways in 2006 was under-rated© Photograph The Deodic David

For the State, not sure on the other hand, a recovery of privatisation is sound, at least currently. “In theory, transfer of securities allows to de-lever. But today, the‘State up to 1% only, and this should still continue. The coup, sell currently does not have meaning,” judge Henri Sterdyniak.

Another item to put in the balance: the dividend potential which is waived by privatizing. In the short term, “we can do a good operation”, but this is not necessarily the case “over the long term,” emphasizes the economist. Especially if the sales price is under-valued, as was the case with the motorway companies in 2006.

For Elie Cohen, the interest of privatization depends on the needs of the moment. “If the State wants to privatize, it is because it believes that it has financial needs now, and not a continuous flow of income for 10-15 years.”


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