Out with the old and in with the new. The French government is pushing ahead with sales of state-held stakes in traditional businesses to fund technology investment. Finance minister Bruno Le Maire has therefore confirmed a public offering of up to half the shares of national lottery provider Française des Jeux in November.
For President Emmanuel Macron, privatisations represent a gamble with what little popularity he retains. Though sometimes described as “a tax on the poor”, the FDJ sale is less controversial than privatising a stake in Aéroports de Paris. The monopolistic position of Paris’s airport business worries people more than that of the national lottery operator.
A discounted retail offering of shares in FDJ could even sweeten public opinion, by triggering windfalls for private investors. Institutional demand for FDJ’s recession-resistant earnings is likely to be high.
Lottery ticket sales last year rose only 1 per cent to €12.8bn. But total wagers rose 4 per cent to €16bn, thanks to FDJ’s monopoly on physical location sports betting, typically in kiosks in news agents. The Football World Cup, which was won by Les Bleus, helped boost stakes here by 21 per cent to €3bn last year. After deductions, operating profits of €257m were left for shareholders, a 14.2 per cent margin. Unlike UK lottery disbursements, FDJ earnings feed directly to the French treasury.
Czech gambling group Sazka may be interested in a ticket or two in FDJ. The lottery and betting operator has minority stakes in the Austrian and Italian state lotteries. It also launched a bid for remaining shares in Greece’s lottery operator OPAP in July. At a similar price to that deal of 16 times forward earnings, FDJ would be worth about €3bn. Sazka itself pulled a public offering last year, citing market conditions.
At the right price, Mr Macron will create far more happy winners from a FDJ share offering than its lottery tickets ever have.
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