Published on February 28, 2008
Privatisations The French and the Swedish perspectivesSharing experiences …: Privatisations The French and the Swedish perspectives Sharing experiences … Stockholm Thursday, March 29 2007 Proposed Agenda: Proposed Agenda Privatisations in France in a historical perspective Privatisation routes applied by the French government Role of Investment Banks Some examples of recent French privatisations Privatisations in France – Historical perspective : Privatisations in France – Historical perspective Build-up of portfolio of public companies Nationalisations in the 1930’s, in 1944-46 and in the early 1980’s Creation of government controlled companies Airports, Motorways, Nuclear industry etc. Launch of privatisation initiative in the mid-1980’s 1986 – 88: Launch of privatisation process Saint-Gobain, Alcatel, TFI, Paribas, Suez, Société Générale etc. 1988 – 93: Some minor privatisations, but programme essentially on hold Péchiney, AGF, Total etc. 1993 – 97: Re-launch of privatisation initiative Rhône-Poulenc, BNP, Renault, Elf Aquitaire, AGF etc. 1997 – 2002: Selective privatisations France Telecom, Air France, Aérospatiale, Thales etc. 2002 onwards EdF, GdF, Aéroports de Paris, Autoroutes du Sud de la France (ASF) etc. Around €54bn raised in the market since the beginning of the current programme The French government has applied different privatisation routes: The French government has applied different privatisation routes The stock exchange routes Stock exchange listing Sale of shares in companies already listed on the stock exchange Accelerated bookbuilding Marketed offerings The M&A routes Disposal of stakes in listed companies Mergers Full or partial divestments of non-listed companies Key decision parameters and considerations for the choice of route? : Key decision parameters and considerations for the choice of route? Value considerations Stock market vs. M&A route (which route would maximise the value for the State?) Full vs. partial exit - E.g. IPO to obtain market valuation followed by sale of majority shareholding to strategic investor (Motorways’ cases for example ) Timing: Market conditions at the time the company is ready for privatisation Industrial considerations Creation of larger entities better positioned to compete in a global environment Anti-trust issues Political considerations Employment issues Perception among the public Process transparency Role of Investment Banks?: Role of Investment Banks? Advisor to the Government Advisor to the Company Advisor to Buyers in the context of trade sales In case of an IPO, the advisory mandate includes: Structure of the entity to be listed and transfer from a public status to a ”private like status” Preparation and execution of the market offering (Global coordinator / Bookrunner) In case of market disposal of stakes in listed companies, the advisory mandate includes: Evaluation of best timing and market technique (accelerated bookbuilding versus marketed offering for example) Underwriting Distribution Role of Investment Banks – IPO route: Role of Investment Banks – IPO route A 2-stage mission Preparation of the company Preparation of the market offering (IPO workshops) Accounting, Business Plan and Valuation (relation with French CPT committee) Equity story and Capital structure Communication Marketing to analysts, investors, retail networks Roadshow Timing and offering structure (primary/secondary, retail/institutional, free-float, syndicate structure, employee offering) Due Diligence Documentation and relation with market authorities Selection of advisors (Financial, Legal, Communication, …) Adaptation of regulatory/legal framework (legal status, shareholder agreement, company by laws,…) Review of corporate organisation to fit with listed companies (corporate governance, …) The stock exchange route – Some recent examples: The stock exchange route – Some recent examples Initial Public Offering – EDF (Oct.05, €6.4bn): Initial Public Offering – EDF (Oct.05, €6.4bn) Preparatory work Transaction structure Investment banks involved Key facts of the transaction More than three years of preliminary work: Progressive deregulation of the European and French electricity and gas industry Change of status into “Société Anonyme” (public limited company) Change of French law to enable opening of capital IPO by way of a capital increase capped at €7bn Limited free float (11%) French State advisors: Calyon, Morgan Stanley Company advisors: ABN Amro Rothschild, BNP Paribas, Citigroup Bookrunners (institutional offering): AAR, BNPP, Calyon, MS Bookrunners (retail offering): BNPP, Calyon With a total final market offer of €6.4bn including greenshoe, EDF was the largest IPO in Europe since 1999. Overall demand was high: Retail demand reached 4.9 million individuals and was 1.6x oversubscribed Institutional tranche was 5x oversubscribed Allocation of 66% of the final offering to retail Since the IPO, share price performed extremely well: EDF share price over-performed CAC 40 by 57.9% (as of March 26 2007) EDF share price over-performed DJ Stoxx Utilities by 31.9% (as of March 26 2007) Accelerated Bookbuilding – FT block disposal (June 05, €3.4bn): Accelerated Bookbuilding – FT block disposal (June 05, €3.4bn) Transaction background Transaction structure Process Key facts of the transaction This transaction followed a first disposal in September 2004 (following the vote of a law authorizing the French State to decrease its majority stake in France Telecom) The offering took place rapidly following the expiry day of the lock-up Accelerated bookbuilding with back stop Offering structure with a minimum size + an extension of 15% + over- allotment of 15% The APE (French government shareholding agency) launched a tender offer on Saturday 4 June with a submission of the proposal due on Sunday before 11.00. French State announced the disposal early morning on the 6 June Offer range : €22.5 - 22.85 (-1.6% to -0.1% discount to Friday closing). Final price set at €22.5 FT share price increased by 1.7% on June 7th on the back of buy-back of short positions and in heavy volumes (around 33 m shares) The stock exchange route – Key take-aways: The stock exchange route – Key take-aways Aim at sufficient liquidity at IPO to enable accelerated deals post lock-up, either through a capital increase or a disposal of a block of shares Involve diversified set of banks at the time of the IPO with strong local commitment and recognised brokerage capabilities to ensure aftermarket performance of the shares Retail demand is key to secure success, especially for landmark transactions The M&A route – Some examples: The M&A route – Some examples Disposal of stakes in listed companies to industrial purchasers Sale of a 50.4% stake in ASF to Vinci in 2005 Sale of a 10.9% stake in Crédit Lyonnais to BNP Paribas in 2002 Mergers Merger of DCN with Thales Naval Services (pending) Merger of Suez with Gaz de France (pending) Full or partial divestments of non-listed companies Sale of a 65% stake of SNET (coal thermal plants) in two tranches (2000 and 2004) to Endesa Privatisation of ASF: an example of value maximisation through a combination of the IPO and M&A routes: Privatisation of ASF: an example of value maximisation through a combination of the IPO and M&A routes March 2002: IPO 49% of ASF, France’s #1 motorways operator €2.6bn offering @ €25 per share Institutions (56%), Retail Investors (40%) and Employees (4%) Key aspects of the transaction : Legal framework providing stable conditions ASF leadership position in France and expertise in concessions Defensive characteristics of Toll Motorways 2004-05: IPO of remaining French motorways operators APRR and SANEF Limitation of the free float (max 30%) to avoid unsolicited shareholders Opportunity to float motorway companies with a high level of debt Privatisation of ASF: an example of value maximisation through a combination of the IPO and M&A routes (Cont’d): July 2005: Divestment of remaining stakes in the 3 French motorways operators Competitive process attracting numerous bidders Vinci acquires the Government’s remaining 50.4% stake in ASF Price: €51 per share vs. €25 at the time of the IPO Privatisation through an IPO followed by a sale of a block enabled the Government to maximise proceeds Education of the financial community (financing / valuation) Pricing reference obtained through stock market rating Privatisation of ASF: an example of value maximisation through a combination of the IPO and M&A routes (Cont’d) Involvement of Calyon in selected privatisations(2002 – to date): Involvement of Calyon in selected privatisations (2002 – to date) Advisor to French State Sale of Alcatel’s satellite division to Thales Euro 1 658 m April 2006
Au deuxième trimestre 2008, Calyon a amorcé un projet de réduction de ses charges. Les charges d’exploitation diminuent de 1,7 % entre les deux semestres.