Bruno le Maire addresses the media conference at France's lottery and scratch cards monopoly Francaise des Jeux headquarters in Boulogne Billancourt, France, November 7 2019. Picture: ERIC PIERMONT / AFP
Bruno le Maire addresses the media conference at France's lottery and scratch cards monopoly Francaise des Jeux headquarters in Boulogne Billancourt, France, November 7 2019. Picture: ERIC PIERMONT / AFP

Paris/London — The French government has launched its biggest wave of privatisations in more than a decade, kicking off the process with the sale of the majority of its stake in the national lottery monopoly.

President Emmanuel Macron’s pro-business government wants to raise money to invest in technology that could give France an economic edge in the future.

But opposition figures on both the left and right are worried that the former investment banker’s privatisation push is akin to selling the family jewels.

The government aims to sell down its stake in the Francaise des Jeux (FDJ) lottery operator from 72% to 20% when the shares start trading on November 21.

Finance minister Bruno le Maire said the initial public offering (IPO) was drawing strong interest from investors at home and abroad.

According to the prospectus, the listing should raise up to €1.7bn (about R27bn) for the government, which it has earmarked for a €10bn innovation fund and reducing the state debt burden.

Stock market operator Euronext said FDJ was the biggest IPO in Paris since French asset manager Amundi went public in 2015 and the third-biggest IPO in Europe in 2019.

Strong demand

Strong demand from domestic French investors, ranging from insurers to asset managers and private banks, is allowing FDJ to take on a dismal IPO market that has seen other big European deals scotched recently.

“The institutional placement seems to be going well, even very well, and that gives a very positive signal,” a source working on the deal said.

If the listing goes smoothly, it could embolden the government to press ahead with other big asset sales, namely the more lucrative but politically trickier disposal of airports operator ADP.

Macron’s government wants to sell all or part of its 50.6% stake in ADP, worth about €8.6bn, but opponents have organised an online referendum to stop it.

Legally the operation could be blocked if 10% of registered French voters, or 4.7-million people, sign the petition by March.

The opposition and unions are already up in arms over a planned overhaul of the pension system and another big privatisation would add further oil to the fire.

The last time a French government pushed through a big programme of privatisations was between 2005 and 2007 under centre-right president Jacques Chirac, who died in September.

Asset sales

The head of the state’s APE shareholding agency, Martin Vial, said that other corporate asset sales could follow provided that the companies were left with a solid French shareholder base and the price was attractive.

“Under these conditions, it’s possible there will be other operations to let the portfolio breath a bit,” Vial told journalists at a presentation of FDJ’s IPO.

The offering of FDJ shares has been priced in a range from €16.50  to €19.90, valuing it between €3.15bn and €3.8bn, topping glass bottle maker Verallia, which went public in October with a market valuation of €3.2bn  and gross proceeds of €888m.

The success of large listings such as Verallia and FDJ could boost Paris as an IPO market, especially after recent flops elsewhere in Europe and New York.

The government has reserved a third of FDJ’s share sale for retail investors, hoping to entice them by offering a 2% discount and one free share for every 10 bought.

Reuters