The purchase of 10% of Telefónica through the State Society of Industrial Participations (SEPI) has been received with suspicion by both the political opposition and some financial firms. The return of the State to the capital of the operator as the first shareholder, after its complete privatization in 1997, is seen as an interventionist maneuver in the private sector. The Government defends itself by claiming that this is a common practice in the large countries around us, whose States are present in the capital and even in the management of the country’s strategic corporations.
The Spanish State is the largest investor in Ibex 35 companies. When the purchase of 10% of Telefónica becomes effective, one in five firms listed on the selective will have a public shareholder presence, with a total value of these shares higher to 24,000 million euros, at the close of the market last Friday. Through SEPI, the State is present in Indra’s capital, with 27.99% worth 700 million euros; Redeia, 20% (1,635 million); IAG, 2.52% (200 million); Enagas, 5% (220 million), and Telefónica itself, with 10% (2,070 million). However, the two largest public holdings are that of Aena, in which through Enaire it owns 51% with a value of 12,560 million euros; and that of CaixaBank, in which the Fund for Orderly Banking Restructuring (FROB) maintains 17.3%, valued at 4.9 billion, the result of the rescue of Bankia. Outside of the Ibex, the SEPI’s largest treasure is 4.12% of Airbus, valued at 4,540 million, followed by Ebro Foods, of which it controls 10.36% (243 million).
In addition, SEPI has a wide portfolio of unlisted companies whose management it completely controls, such as Navantia, Enresa (20%), Tragsa, Hispasat (7%), Alestis (24%), Agencia Efe, Correos, Hunosa, Mercasa, Enusa , Ensa, Sepides, Mayasa, Saeca, Cetarsa, Epicom, Hipódromo de la Zarzuela and Cofivacasa.
The France of ‘liberal’ Macron
Emmanuel Macron appears to be, according to the caricature that some critics make of him, an ultra-liberal politician, a kind of Thatcher French. In reality, he is the president who has renationalized the electrical colossus EdF, who has made the State the first shareholder of Air France and who has put an end to decades of privatizations in France. The French president does not detract from the Colbertist tradition, due to the name of Jean-Baptiste Colbert, Minister of Finance of Louis XIV and precursor of the doctrine of French-style state capitalism. Although this was not his initial idea. Upon coming to power in 2017, he harbored liberalizing whims. “The State – said, at the beginning of the first term, his Minister of Economy, Bruno Le Maire – has no vocation to run competitive companies in the place of shareholders who have the skills and knowledge to do it better.”
Macron and Le Maire’s plan was to get rid of three crown jewels: Paris Airports (AdP), the gas company Engie and the gaming and betting company Française des Jeux (FdJ). In the end, only FdJ was privatized. What, meanwhile, led the president to reconsider privatizations was the pandemic in 2020. The State came to the rescue of Air France and increased its participation to 28.6%. And within the framework of a new civil nuclear program and at a time of difficulties for the sector, it went from 84% to 100% of the electric company EdF. Since the mid-eighties, successive governments, from the right and the left, had tended to privatize. The last wave of nationalizations occurred after the socialist François Mitterrand came to power in 1981. The previous ones were in the post-world war and, in the 1930s, with the Popular Front.
In total, the French State today participates in 85 companies, valued at 153 billion euros. Among them are jewels of indigenous capitalism, such as the telephone company Orange (the former France Télécom (23% of the capital) or the automobile company Renault (15.01%), of which it is the largest shareholder. The State Participation Agency (APE), under the supervision of the Ministry of Economy and Finance, “embodies the shareholder State, an investor with its own funds in companies deemed strategic (…), to stabilize their capital or accompany them in their development and transformation,” reads its corporate page. In today’s France, it plays a role in which, as I pointed out, Le Monde In a recent article, “it accompanies government policy in favor of sovereignty and the decarbonization of the industry.” “These companies structure our economy and our society and represent, in some cases, the great public services to which the French are attached,” writes Le Maire in the latest APE report. The time has changed.
Portugal, back and forth in privatizations
The entry of the Portuguese State into a strategic company for the country that is most significant in recent years has been the buyback of the airline TAP. As soon as he came to power, the socialist prime minister, António Costa, stopped part of the privatization approved in 2015 by his predecessor, the conservative Pedro Passos Coelho, who had handed over the company to David Neeleman, owner of Azul airlines. At the end of 2021, the State acquired 100% of the company after allocating 3.2 billion euros to save it from bankruptcy. The operation raised both criticism for the economic impact and applause for preventing its collapse. The political crisis, after the resignation of Prime Minister António Costa, has slowed the process to privatize it again throughout 2024. It will now be a decision that will depend on the new Government that emerges from the March elections.
António Costa’s cabinet also made a round trip with the company Efacec, dedicated to energy and mobility projects such as metro lines or electric vehicle charging infrastructure. If he nationalized it in 2020, a few months ago he sold his stake to the German investment fund Mutares.
Portugal lost control over several strategic companies during the euro crisis and the country’s intervention by the troika. In those years, the electricity grid company (REN), Correos (CTT) and the company that manages the country’s airports (ANA) were privatized, in addition to completing the State’s total exit from the EdP energy company. However, the ownership of Caixa Geral de Depósitos was preserved, a state entity that is the first bank in the Portuguese financial system.
Germany maintains industrial stakes in energy, telephone, banking, airports and a whole series of companies that it considers strategic. In total, according to the federal government’s latest investment report, it owns shares in 117 companies and special funds. In the case of telecommunications, its participation in the equivalent of Telefónica, Deutsche Telekom, is striking, where it holds more than 30% of the capital, both directly and through KW, the public investment bank. Public participations have increased in recent times. A year ago the coalition government of social democrats, greens and liberals acquired a 99% stake in the energy company Uniper to guarantee the energy supply in the country. The company was in difficulty after the Russian invasion of Ukraine. Germany is also a shareholder in Commerzbank, where it has 15%, after saving the large Frankfurt bank from collapse during the financial crisis of 2008 and 2009. Commerzbank returned the aid but the Government maintained its participation.
Recently, and due to the budget crisis caused last month by a devastating ruling by the Constitutional Court, the Minister of Finance, the liberal Christian Lindner, has raised the possibility of selling some participation and obtaining several billion euros. Lindner had already floated the idea during the negotiations of the coalition agreement, without his proposal going anywhere then. Now there does not seem to be much interest among his government partners either. The Social Democrats would refuse, for example, to get rid of 20% of Deutsche Post, the equivalent of the Post Office, because it is a large employer. The three parties agree on excluding a possible sale of Deutsche Telekom shares, considering that telecommunications are of national interest.
The ambitious Italian plan
The far-right government of Giorgia Meloni has once again talked about privatization in Italy. Meloni’s ambitious plan is to raise 20 billion euros before 2026, to tackle an ever-growing public debt, a figure that economists consider quite difficult to achieve. The Executive, which on the other hand is reluctant to get rid of large state companies, is studying formulas to carry out divestments in non-strategic sectors, from the postal company (Poste) to the energy company Eni, the national railway company Ferrovie or public television Rai. One of the operations that seems safe is the sale of the Italian State’s majority stake in the Monte dei Paschi di Siena bank, which it rescued in 2017, and according to the agreement with the European Union it must remove it from the public orbit next year. . And the sale of 41% of the flag airline, ITA Airways, born from the liquidation of the old Alitalia, to the German airline Lufthansa, is also taken for granted.
At the same time, although the trend is to reduce state participation, the range of companies in which the Government intends to exercise the so-called “golden power” is growing (golden power) to safeguard industries considered of national interest and condition the sale to foreign companies. Along these lines, last summer the Italian Government approved the return of the State, although in a minority, to Telecom Italia. The Executive will take over a maximum of 20% of Netco, the network infrastructure business of Telecom Italia (TIM), for a value of 2.2 billion euros. The decision was made after the American investment fund KKR bought the infrastructure of the Italian telecommunications giant.
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