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France’s FSI Celebrates Its Third Anniversary

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By Alexia Wai-Chun Tye

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.

Ascendas-Singbridge Acquires Three Hotels in Osaka

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Singapore’s Ascendas-Singbridge has acquired three hotels in Osaka for 10.29 billion JPY to tap tourism growth in Japan’s third-largest city.

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BlackRock Contemplates Stake in Eurizon

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Asset management giant BlackRock is contemplating purchasing a 30% ownership stake in Intesa SanPaolo’s asset management unit called Eurizon Capital SGR S.p.A. BlackRock is keen on growing its technology business and increase market adoption of its Aladdin platform.

Intesa has been working with UBS to seek out strategic options for Eurizon. Intesa is keen on maintaining control over Eurizon.

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SWFI First Read, June 22, 2018

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JPMorgan Fund Buys 40% of Oxford Properties’ French Portfolio

A fund advised by JP Morgan Asset Management committed €400 million in Oxford Properties’ French portfolio. Essentially, Oxford Properties sold a 49.9% non-managing interest in 32 Rue Blanche, 92 Avenue de France and Paris Bastille. Oxford Properties made its maiden investment in Paris in 2014 when it acquired 32 Rue Blanche.

Oxford Properties is the real estate unit of OMERS.

Temasek Explores Further Cash Commitments to FirstCry

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