Sovereign Wealth Fund Institute

By Alexia Wai-Chun Tye

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.

According to the Rio Tinto press release, “Rio Tinto has received a binding offer from funds affiliated with Apollo Global Management, L.P. (Apollo) and the Fonds Stratégique d’Investissement (FSI) to buy a 61 per cent stake in Alcan Engineered Products (AEP), excluding the Cable Division. The transaction follows the successful divestment last year of the Composites division of the Engineered Products business. The terms of the transaction are confidential.

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

According to the press release, “ArcelorMittal executive Jean-Yves Gilet has been chosen to head France’s state-backed FSI investment fund, the Economy Ministry and state bank Caisse des Depots said in a joint statement on Tuesday.

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

According to the press release, “Cerenis Therapeutics SA (Cerenis), a biopharmaceutical company specializing in the research and development of novel therapies based on the metabolism of HDL (the “good” cholesterol) to treat cardiovascular and other metabolic diseases, announced today it has raised €40 million in the first close of its series C financing.

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

By Alexia Tye

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.

Bloomberg reports that, “France’s sovereign wealth fund may spend 900 million euros ($1.3 billion) before the end of the year and increase aid to the auto industry in 2010, as the recession batters companies’ finances. The 20 billion-euro investment pool, set up last year by President Nicolas Sarkozy, may provide capital to suppliers of Airbus SAS and Safran SA and open a fund for smaller companies, said Gilles Michel, managing director of the fund.

‘The effect of the crisis on companies is worsening,’ Michel said in an interview in Paris late yesterday. ‘Many companies are facing financial pressure.’

The fund, created last year to protect companies the government considered strategic from “foreign predators,” has spent almost 600 million euros so far this year, meaning total investment may reach 1.5 billion euros in 2009. French gross domestic product may shrink 3 percent this year, the most since 1949, the national statistics agency estimates.”

read more: Bloomberg

Khaleej Times reports that, “Mubadala Development Company, an investment arm of the Abu Dhabi government, on Tuesday signed a deal to explore joint investment opportunities in French companies. The memorandum of understanding between Mubadala and France’s Fonds Strategique d’Investissement, or FSI, aims to set up a framework for investing in sectors that are of mutual interest to both the companies. Potential areas for investment in listed or private French companies include technology, health sciences, bio-technology and renewable energy. The MoU was signed during a visit by French President Nicolas Sarkozy to the UAE capital.

‘This partnership fits into our strategy to work with leading international organisations across a range of industries to develop and operate businesses that not only generate outstanding financial returns but also contribute to the economic diversification of Abu Dhabi and bring real and lasting benefits to its people,’ said Mubadala CEO and Managing Director Khaldoon Khalifa Al Mubarak.”

read more: Khaleej Times

France’s sovereign wealth fund on Wednesday announced it had taken a stake in French auto parts group Valeo, a firm that has been targeted by a New York investment group pushing for a merger. The FSI said it’s taken an 8.3% stake in Valeo and has 10.55% of the voting rights. New York-based Pardus Capital Management, Valeo’s top shareholder, has suggested the French firm merge with Visteon a rival auto parts maker in which Pardus also is the leading shareholder.

read more: MarketWatch

“Paris, 20 November 2008 – The President of the French Republic announced this morning in Montrichard the creation of a Strategic Investment Fund (SIF), which is intended to boost the equity and to stabilise the capital of French businesses. He has decided to entrust the management of this fund to Caisse des Dépôts.

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