France has a long history of state ownership and keeping control of its so-called "national champions." As the UK led a wave of privatizations across Europe in the late 1970s, its neighbor bucked the trend and, for a long time, remained committed to ensuring government influence in the boardrooms of its prized public assets.
The country has witnessed a break from tradition with the election of President Emmanuel Macron, who has fewer qualms than his predecessors about selling the "family silver" to help fund a new economic doctrine: the startup nation. While the French government holds €100 billion worth of stakes in more than 81 companies across a range of industries, it's turning its back on the old certainties of public ownership in favor of building an innovation-driven economy. Macron's zeal for reform means he is willing to do what was once unthinkable and dispose of long-held state assets—symbols of national pride that help fill the nation's coffers—via the passing of a new law, the PACTE.
Although covering a myriad of issues related to the business world, a key element of the PACTE is facilitating the privatization of three companies with the aim of paying down the nation's debt and creating a €10 billion innovation and industry fund.
The vehicle, announced last year by finance minister Bruno Le Maire, will be managed by Bpifrance and target so-called "deep tech" startups, with a particular focus on AI. Capital for the innovative companies won't come from the €10 billion, but rather from the fund's annual returns, which are expected to be in the range of €200 million to €300 million.
Up for the chop...MORE
The first government-held company to be put on the block is lottery operator Française des Jeux. The group, of which the state owns 72%, generated 2018 revenue of €1.8 billion and contributed €3.5 billion to public finances. Rather than sell the entire holding, the government plans to reduce its stake to 20%. FDJ currently holds the monopoly in France on lottery games with 26.1 million players and its status will be maintained even if it's sold—a very attractive target for whoever lands it....
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Ahead of and during the tour Reuters had a couple headlines, amusing in juxtaposition:
Macron to call on U.S. funds to build French start-ups, not steal themPreviously on the FrenchTech channel:
'Don't drop the ball': U.S. tech investors warn Macron over taxes
"French government officials advocate for a €500m investment in blockchain technology"
The country might be better served adding to the €1.5 billion that President Macron has pledged for research in Artificial Intelligence.
But I might be biased.
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