Guest Contributor

On 17 November 2011, representatives of the French financial, industrial and private equity community were invited to a celebration to mark the 3rd anniversary of the creation of France’s Fonds Stratégique d’Investissement (FSI) at the Elysées presidential palace.

President Nicolas Sarkozy congratulated the sovereign wealth fund on its achievements since its creation in 2008: a total of Euro 5.9bn invested in French companies, small and large.

He also announced the establishing of 3 successor funds focused on 3 sectors: aeronautics (Aerofund 2), healthcare (InnoBio MedTech) and nuclear energy.

The event was relatively discrete, and observers noted that the President was obliged to make some new announcements on the subject of the financing of French small and medium sized companies (SMEs), an area he champions closely. The mandate of the FSI remains quite different from that of major SWFs – it is mainly inward-looking and designed as a pillar of France’s industrial policy. One of the chief objectives is to support the development of future champions of French industry, throughout the value chain, down to the smallest subcontractor. Its investments have been chiefly to insulate French SMEs from hostile takeovers, rescue distressed companies or meet financing needs that the rest of the financial markets cannot provide. Indeed France has several investment and credit entities with a multiplicity of programs to assist the development of SMEs. These institutions include CDC Entreprises (a subsidiary of French state institution Caisse des Dépôts, also the 51% parent of the FSI), OSEO, Avenir Entreprises, etc, and the challenge is how to make them all work effectively together.

To delve deeper into the French local regions, Sarkozy wants to create a new fund called FSI-Régions. He did acknowledge that there would be a slowdown in the pace of investment because of the current crisis, and made no mention of new capital injections for the FSI. He stressed that the FSI, whilst serving the national interest, aims to make a reasonable profit, “but not obscene levels of profit like hedge funds”. He also lashed out at the banks, saying that they should declare less bonuses and dividends, and concentrate more on lending to industry. In spite of the pressure to meet new capital adequacy standards, the banks must not neglect the SMEs, he said.

The reaction of the attendees was mixed. Aside from questions over its purpose, the FSI has also been criticized for investing in companies that have sold defense systems to the Libyan and Syrian regimes.

No mention of an international strategy was made – cooperation and co-investment with foreign investors could serve to attract the additional capital that the FSI needs.

Alexia Wai-Chun Tye is a Partner at AddVenture, a private equity advisory firm.

The views, opinions, positions or strategies expressed by guest contributors and those providing comments are theirs alone, and do not necessarily reflect the views, opinions, positions or strategies of the Sovereign Wealth Fund Institute or any employee thereof.

Guest Contributor

France’s Fonds Stratégique d’Investissement (FSI) generated creditable results for 2010, reinforcing its raison d’être as France’s answer to the sovereign wealth fund model, albeit with a distinct national development mandate focusing solely on French domestic markets.  [Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view site content.]

The views, opinions, positions or strategies expressed by guest contributors and those providing comments are theirs alone, and do not necessarily reflect the views, opinions, positions or strategies of the Sovereign Wealth Fund Institute or any employee thereof.

Guest Contributor

Whilst the FSI’s newly appointed CEO Jean-Yves Gilet has yet to take up his position after the summer lull, the President of the Board, Augustin de Romanet, has been speaking publicly on a variety of issues facing the FSI and its 51% controlling shareholder, the state institution Caisse des Dépôts (“CDC”).

A frequently asked question concerns the financial resources of the FSI and its longer term future.  With the double threat of new prudential regulations Basel III and Solvency II that will soon come into force, de Romanet sees a shrinking of the traditional sources of funding for fast-growing, innovative companies, acting alongside the FSI and CDC.  In the medium term FSI will need further capital injections in order to ensure that promising French companies receive the support they need.  In the shorter term, de Romanet sees the solution coming from long term international investors, including in particular sovereign wealth funds, co-investing alongside the FSI and its parent CDC.  He also mentioned soliciting investors from Singapore, Malaysia and Kuwait. [Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view site content.]

This article will appear in the Sovereign Wealth Quarterly Q3Y2010.

The views, opinions, positions or strategies expressed by guest contributors and those providing comments are theirs alone, and do not necessarily reflect the views, opinions, positions or strategies of the Sovereign Wealth Fund Institute or any employee thereof.

Under the terms of the transaction, Apollo would become the majority and managing shareholder in AEP with a 51 per cent stake in a new holding company for AEP, with the FSI holding 10 per cent. Rio Tinto would hold a 39 per cent stake.  Rio Tinto will respond to this binding offer following consultation with the relevant employee representatives.

Guy Elliott, Chief Financial Officer, Rio Tinto, said: “This potential sale of a majority stake to Apollo and FSI is in line with our strategy of divesting non-core assets of Rio Tinto Alcan. When this transaction is completed, we will have exited all downstream businesses, except Alcan Cable. We look forward to participating in the upside potential of AEP, both as a minority shareholder and key supplier to the business.”"

Read more: Rio Tinto Press Release

Gilet will take the reins in September and replace outgoing Chief Executive Gilles Michel, who announced in June he was leaving for minerals company Imerys, the statement said. The FSI, 49 percent owned by Caisse des Depots and 51 percent by the government, was created in 2008 to protect so-called “strategic” French companies from the economic crisis.

Since then, the fund has bought stakes in companies including video games maker Ubisoft, dairy group Danone, entertainment conglomerate Vivendi and catering company Sodexo”

Read more: Reuters

In this round €20 million came from the Fund for Strategic Investment (FSI) with an additional €20 million coming from the existing investors: Sofinnova Partners, HealthCap, Alta Partners and TVM Capital, EDF Ventures, OrbiMed and DAIWA Corporate Investment. This third round of financing for Cerenis (Series C) will fund Phase II development of the lead Cerenis program, CER-001, an HDL-mimetic for the treatment of cardiovascular disease and to support the development of other new HDL therapies.

This round of financing brings the total capital raised to date by the company to €107 million. Jean-Louis Dasseux, co-founder and CEO of Cerenis said: “We welcome the FSI as a new investor and are very pleased to have such strong support from our current investors. This support recognizes the progress made to date in the development of Cerenis in the field of HDL, the promise of the pipeline of products, and the quality of Cerenis’ team.”"

Read more: Press Release

Guest Contributor

Gilles Michel, the CEO of the FSI, will shortly step down to take up a new position in the private sector.   He looks back over what the FSI has accomplished in the short period since its creation in January 2009.

Defending what may seem to be a premature departure, he feels that since he set up the FSI under the orders of the President of the Republic – the fund was then literally himself and a mobile phone – the fund is solidly in place and has achieved much.  With a team of 30 (11 professionals plus mostly state-appointed senior management), 110 investments have been executed, and the FSI has found a firm footing in the French economic landscape.

[Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view site content.]

Alexia Tye is a Partner at AddVenture, a private equity advisory firm.

The views, opinions, positions or strategies expressed by guest contributors and those providing comments are theirs alone, and do not necessarily reflect the views, opinions, positions or strategies of the Sovereign Wealth Fund Institute or any employee thereof.