The French government’s massive stock portfolio just keeps getting bigger

The directors of Élysée Asset Management eye up a new investment.
The directors of Élysée Asset Management eye up a new investment.
Image: Reuters/Charles Platiau
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In the end, Arnaud Montebourg wanted in on the action. What clinched GE’s bid for Alstom’s energy business, it seems, was an agreement for the French state to buy a 20% stake in what was left of the company following the deal.

Montebourg, France’s economy minister (pictured above, on right, with president Francois Hollande), pushed hard for guarantees on jobs and control of Alstom, extracting significant concessions from GE as a result. A rival bid led by Germany’s Siemens, once favored by the minister, fell by the wayside when GE offered to create new jobs in France, set up a series of joint ventures, and transfer its rail-signaling business to Alstom.

When the deal was signed between Alstom and GE, Montebourg—appropriately enough—was front and center:

Le France will become Alstom’s largest shareholder after its tie-up with GE, which is necessary to “stabilize the capital of the company,” according to a government statement (link in French).

This was the second government purchase of a stake in one of France’s “industrial jewels” this year, following the rescue of carmaker Peugeot, also alongside a foreign industrial partner (China’s Dongfeng Motor). Montebourg’s dirigiste tendencies are thus reinforced, and the state’s hand in the country’s listed companies strengthened even further. Well over one million workers are employed by firms with state shareholdings, and France sees these stakes as a means to support jobs amid sputtering economic growth and related labor unrest.

The French government was already far more involved in its listed companies than any other in the developed world. Nobody else comes close, according to the OECD’s latest data, covering 2012:


The French government’s latest valuation of its stock portfolio (pdf) estimates its worth at €80.9 billion ($110 billion), a sizeable chunk of the companies’ total market cap of €250 billion. “We must put this portfolio to good use in support of an economic, industrial and social strategy guaranteeing that jobs remain in France along with the necessary skills required to maintain our independence and inject impetus into our economic growth,” the government says.

And so while other governments are eager to divest their shareholdings—think of all the stakes in banks that governments took on during the depths of the global financial crisis—the French are doubling down.