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France still hopes for ADP privatisation, delay hurts shares again

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France still hopes for ADP privatisation, delay hurts shares again
FILE PHOTO: Check-in signs are pictured in a departure hall inside Charles de Gaulle airport, operated by Aeroports de Paris, in Roissy, France, April 11, 2019. REUTERS/Benoit Tessier   -   Copyright  BENOIT TESSIER(Reuters)
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By Sudip Kar-Gupta

PARIS (Reuters) – France’s finance minister said on Friday he remained committed to privatising the country’s main airports group ADP, but the company’s shares slumped for a second straight day over plans for a public vote on the process.

The Constitutional Council on Thursday approved plans for a referendum that will delay, and could block, the planned privatisation.

Finance Minister Bruno Le Maire said the government would not take the process any further while a referendum was being pursued by opposition politicians.

“Fundamentally, I believe in this project,” Le Maire told CNews.

President Emmanuel Macron’s centrist government wants to sell off state assets in order to finance a 10 billion euro (9 billion pounds)innovation fund, and to pay off state debts.

Those assets include the state’s majority 50.6 percent stake in ADP – the operator of Paris’ Charles de Gaulle and Orly airports. But the government is facing broad opposition against the plan due to concerns over the loss of an income stream, and a loss of influence in the transport sector.

ADP shares were down 10% in early trading on Friday, adding to a 5.7% drop on Thursday following the decision by the French constitutional council.

Investment bank JP Morgan downgraded ADP to “neutral” from “overweight” following that decision on Thursday.

“Although we were expecting this decision, and although we understand that technically the government could still launch the privatisation should they really want to, the government has decided to put the privatisation decision on hold during the referendum process,” wrote JP Morgan.

“We also believe that bidding appetite in this context would be impacted,” added the U.S. bank.

Le Maire sought to play down the setback, saying he saw the referendum as an “opportunity” to explain better the privatisation plan. Privatising ADP would help the French economy as the sale would raise cash to cut debts, he added.

The French government’s 50.6 percent stake in ADP is currently worth around 8.4 billion euros. Le Maire is also studying selling the state’s stake in lottery operator FDJ (Francaise des Jeux) and energy group Engie.

Organisers need to win the backing of a fifth of the members of parliament, get the Constitutional Council’s green light and then obtain signatures of 4.7 million voters – a tenth of the electorate – over the Internet over a nine-month period.

Political analysts say it would be difficult but not impossible to get that many signatures to block the sale.

(Reporting by Sudip Kar-Gupta; Editing by Richard Lough)

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