The state shareholder must now ensure the energy and industrial independence of the country

The Covid-19 pandemic and the war in Ukraine have “prompted us to reassess the state’s investment doctrine”, says Alexis Zajdenweber, director general of the State Participation Agency (APE) in the introduction to his Annual Report.

For the State shareholder, it is no longer just a question of refloating the flagships of its economy – EDF and Air France-KLM in the lead – or of preventing foreign investors from taking control. We must now ensure the country’s energy and industrial independence.

The Covid-19 pandemic and the war in Ukraine have “prompted us to reassess the state’s investment doctrine”, says Alexis Zajdenweber, director general of the State Participation Agency (APE) in the introduction to his Annual Report.

The decisions of the State shareholder “are based on logics of economic sovereignty and consolidation of sectors beyond the only heritage and profitability, contrary to the stakes for private investors”, adds the Minister of Economy and Finance Bruno The Mayor in this text annexed to the 2023 finance bill.

“Some form of urgency”

Pandemic and war “make the government not only sensitive to the strategic nature of certain assets but also to the risk of shortages”, explains economist Elie Cohen to AFP, citing in particular medicines and energy.

The renationalisation of EDF, with a difficult takeover bid due to be submitted in November, is a good illustration of this: a company whose debt should reach 60 billion euros by the end of the year. And colossal industrial objectives set by the government, both in terms of short-term electricity supply and in terms of innovation to develop nuclear power in the longer term.

“We must respond to the immediate needs” in terms of energy supply, there is “a certain form of urgency”, underlined Mr. Zajdenweber on Friday during a presentation of the report, referring to the preponderant share of energy ( 50.3%) in the portfolio of listed state companies.

The APE, which manages the 128.4 billion in public holdings in more than 80 large entities, is “the only player that combines a high level of state control, an ability to favor strategic or industrial objectives before expectations yields”, he adds in the text.

The renationalisation “does not mean that there is no longer any management at EDF”, recalled the new director general of the APE on Friday, specifying that the company was expected to present a strategy for the long term.

“Costly hypocrisy”

According to Elie Cohen, the renationalisation of EDF, a 9.7 billion euro operation, puts an end “to the costly hypocrisy of having a listed company on which the State imposes things that could go against its interest”, such as selling more of its nuclear electricity at low prices to its competitors.

On the envelope of 12.7 billion provided for operations to support strategic French companies in the second half, the fate of the remaining three billion has not yet been decided.

“We don’t have to use them,” Zajdenweber said. Especially since budgetary allocations are, along with the sale of shares, the only two tools available to the APE to finance its operations.

No sale being planned in the short term in the face of “unfavorable” market conditions, the State reserves the possibility of intervening according to the evolution of the situation, he added, calling himself “pragmatic” in a period “full of uncertainty”.

The Court of Auditors had warned at the start of the year of the reduced possibilities of disposals and the collection of dividends with, on the other side, “potentially very high” intervention needs.

“It is clear that the state will not cause an earthquake (in other sectors, editor’s note) like what is happening on the electricity market”, found Elie Cohen.

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