The state acting as an owner the french reforms
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The State acting as an Owner : The French Reforms. Jean-Louis GIRODOLLE Vice-Director French Government Shareholding Agency. Synopsis. Introduction. A dedicated entity : The French Government Shareholding Agency (« Agence des Participations de l’Etat »). 1.

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The state acting as an owner the french reforms

The State acting as an Owner :The French Reforms

Jean-Louis GIRODOLLE

Vice-Director

French Government Shareholding Agency


Synopsis

Synopsis

Introduction

A dedicated entity : The French Government

Shareholding Agency (« Agence des

Participations de l’Etat »)

1

A clear owernship policy, aimed at modernizing

and transforming SOEs

2


Synopsis1

Synopsis

Introduction

A dedicated entity : The French Government

Shareholding Agency (« Agence des

Participations de l’Etat »)

1

A clear owernship policy, aimed at modernizing

and transforming SOEs

2


Introduction 1 2 the french state a significant and active shareholder

Introduction (1/2):The French State : a significant and active shareholder

  • A sizeable portfolio

    • 50 significant groups or entities controlled

    • Market value of listed companies portfolio €45bn ; 10 stakes have a value above €1 bn

    • Total consolidated assets of companies controlled by the APE amount to €530bn, to be compared with €950bn total assets of the 33 industrial companies of the CAC 40


Introduction 2 2 the french state a significant and active shareholder

Introduction (2/2):The French State : a significant and active shareholder

  • A leading actor on the European privatization market

    • Disposals by the State : IPOs, secondary offerings, trade sales,…

      • Since 1993, over €60bn, over 5% of GDP

      • 23% of total State disposals in Europe

    • Corporate transactions : rights issues, over 500 non core asset disposals


Synopsis2

Synopsis

Introduction

A dedicated entity : The French Government

Shareholding Agency (« Agence des

Participations de l’Etat »)

1

A clear owernship policy, aimed at modernizing

and transforming SOEs

2


A dedicated agency 1 4

A dedicated Agency (1/4)

  • Background :

    • Fast changing context for SOEs : globalization, deregulation

    • Major corporate governance failures : Credit Lyonnais, France Tel, EDF

  • Process :

    • 2002 : report by a group of businessmen, Governement decision to establish a dedicated Agency within the Treasury

    • 2003 : implementation : Start-up approach in building the project


A dedicated agency 2 4

A dedicated Agency (2/4)

  • A mix between government culture and the model of private holdings :

    • Task force under the authority of the Minister for Economy & Finance

    • Self-management budget (€9m) within the Treasury framework

    • Increased human resources

    • Mixed culture of skills


A dedicated agency 3 4

A dedicated Agency (3/4)

  • A clear leadership within the State : Agency established as sole shareholder of French major SOEs :

    • Governance : coordinates SOE board members activity, votes at general shareholders meetings,…

    • Financials : audit committee, dividend policy,…

    • Strategic operations : M&A, restructuring, privatizations

  • No interference with other State functions :

    • Regulators

    • The State as a client (procurements, concessions,…)


A dedicated agency 4 4

A dedicated Agency (4/4)

  • Increased transparency and public information:

    • Annual report to public and Parliament

    • Informations about Agency activity available on Ministry of Finance website (www.minefi.gouv.fr) and soon on a dedicated website (www.ape.minefi.gouv.fr)

    • Consolidated financial statements established for the first time in 2004 (for fiscal year 2003)


Synopsis3

Synopsis

Introduction

A dedicated entity : The French Government

Shareholding Agency (« Agence des

Participations de l’Etat »)

1

A clear owernship policy, aimed at modernizing

and transforming SOEs

2


A clear ownership policy 1 5

A clear ownership policy (1/5)

  • Implementation of best corporate government practices in SOEs (“code of good practices” between Agency and SOEs):

    • Boards fully enpowered

    • Committees

    • Independant auditors

    • Professionalized State representatives


A clear ownership policy 2 5

A clear ownership policy (2/5)

  • Promotion of transparency in SOEs :

    • Clear relations with the State, based on contracts

    • Greater financial transparency :

      • international accounting standards (IFRS)

      • financial communication


A clear ownership policy 3 5

A clear ownership policy (3/5)

  • Active role of Agency as a shareholder :

    • Enhanced relations with top management

    • Annual strategic dialogue

    • Regular reporting

    • Agency systematically represented in audit and strategic/investment committees

    • Close scrutiny on major investment/disposal projects


A clear ownership policy 4 5

A clear ownership policy (4/5)

  • Promotion of a modernized corporate culture and framework of SOEs :

    • Promotion of high quality management, shareholder value orientation and international culture in line with the international practice

      = a major change with the traditional approach of some SOEs with an engineer culture more oriented towards technological perfection than financial performance

    • Change of the by-laws of some SOEs (from State entities to companies : DCN/military shipyards, EDF, GDF, ADP, Postal Bank)


A clear ownership policy 5 5

A clear ownership policy (5/5)

  • Increasing and capturing shareholder’s value :

    • Focus on operational performance and efficiency

    • Industrial partnerships in order to create value : Air France-KLM, Renault-Nissan, integration of Wanadoo and Orange into France Telecom, Sagem-Snecma,…

    • Privatization considered not only as a cash generating process but also as an opportunity for the development of solid companies

    • State financial support (recaps) when rational, under the control of the European Commission


Conclusion agenda 2005 2006

Conclusion :Agenda 2005-2006

  • Utilities : EDF (electricity), GDF (gas)

  • Paris airports : Aéroports de Paris (ADP)

  • Future Postal Bank

  • Railways : SNCF (freight activity restructuring, non core assets disposals)

    …….


The state acting as an owner the french reforms1

The State acting as an Owner :The French Reforms

Jean-Louis GIRODOLLE

Vice-Director

French Government Shareholding Agency


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