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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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