Sarkozy rolls out 20bn euro rescue fund
Issued on: Modified:
An investment pool of 20bn euros will be created to bail out French companies "ready to forge alliances" with foreigners after being stung by the financial crisis, President Nicolas Sarkozy announced Thursday.
President Nicolas Sarkozy on Thursday unveiled a 20-billion-euro fund to shore up key French companies threatened by the economic crisis and protect them from foreign predators.
The amount announced was far below the 100 billion euros (125 billion dollars) initially floated as the start-up capital last month when Sarkozy announced his French version of a sovereign wealth fund.
"This fund is an anti-crisis weapon", Sarkozy said, arguing that it would help France, the euro-zone's second biggest economy, "continue to be a country where we build cars, boats, trains and planes"
"We want to turn this crisis into an opportunity for development," he said during a tour of the family-owned Daher aerospace equipment plant in the Loire valley, the first firm to receive an injection of 85 million euros.
France has a strong tradition of economic patriotism, with the state readily stepping in with huge bailouts for its industrial champions when they fall on hard times.
Last month, Sarkozy announced the creation of the new investment vehicle to protect French companies that could fall prey to a foreign takeover if their stock plummets during the looming recession.
On Thursday, he said the French fund was "ready to forge alliances" with foreign-owned funds and argued that supporting industry was the best "social policy" that his government could take in light of the economic crisis.
The fund will be managed by a state-run agency, the Caisse des Depots et Consignations (CDC), and be subject to parliamentary oversight.
France plans to raise six billion euros in debt to "ensure it has a real capacity to take action in the coming months," Sarkozy said.
The remainder will be provided by the CDC, the majority stakeholder, and the state, which could contribute its share assets in Air France, Renault or the Chantiers de l'Atlantique naval shipyard, he added.
"In confronting this crisis, there are two strategies," Sarkozy argued. "Either you stay locked up at home or you face up to the storm in an offensive manner."
Sarkozy has described the measure as a "sovereign wealth fund", on the model of those controlled by energy-rich countries like Russia or Gulf nations with billions of dollars at their disposal ready to invest.
The funds, which are generally defined as state-controlled investment vehicles, have been around since the early 1950s but their ranks have swollen in recent years.
Their rise has been accompanied by fears in some European countries and Washington that governments controlling sovereign wealth funds could use them to advance their own political and strategic aims.
CDC president Michel Bouvard cautioned however that the fund would not be offering free handouts to any company that asks.
"No one thinks that the state can save every company regardless of its state or its capacity to bounce back," Bouvard told AFP.
Clear investment guidelines are to be formulated within the coming days, he said, underscoring the government's desire to move quickly.
The former head of pharmaceutical giant Sanofi-Aventis, Jean-Francois Dehecq, and Patricia Barbizet, the chief executive of the Artemis private investment group, were named presidents of the fund's two managing committees.
CDC managing director Augustin de Romanet will be the chairman of the fund's board of directors.
The International Monetary Fund estimates at between 1.9 and 2.8 trillion dollars the amounts held in sovereign funds worldwide, but other monitoring groups have put the figure as high as five trillion dollars.
Daily newsletterReceive essential international news every morningSubscribe