France Begins IPO Process of Lottery Operator FDJ

(Bloomberg) -- France kicked off the initial public offering of national lottery operator Francaise des Jeux in a sale that could raise more than 1.5 billion euros ($1.7 billion).

Market regulator AMF has approved FDJ’s registration document, which is the first step in its privatization through a planned listing in Paris, the company said in an emailed statement on Friday.

The price range for a share will be announced on Nov. 6 and trading is expected to start on Nov. 21, Martin Vial, head of France’s shareholding agency Agence des Participations, or APE, said during a press conference in Paris.

The stock offering is part of an effort by President Emmanuel Macron to reduce the state’s debt and finance innovative industries. The government last year began laying the groundwork to lower its ownership in Francaise des Jeux and airport operator Aeroports de Paris SA.

“This privatization project opens a new chapter in the company’s history,” Chief Executive Officer Stephane Pallez said in the statement. Completion of the listing is subject to AMF’s approval of the prospectus and to “favorable market conditions,” according to the statement.

France plans to cut its 72% stake in Francaise des Jeux to 20% in the offering, and will create an independent gambling regulator. The company, which had revenue last year of 1.8 billion euros and profit of 170 million euros, has its roots in a national lottery created in 1933 to aid soldiers injured in World War I. The company expects 2019 revenue to reach about 1.9 billion euros, according to Friday’s statement.

Biggest in Years

Banks working on the IPO in September expected the company to be valued at 3 billion euros to 3.5 billion euros, French daily Les Echos reported at the time, so a sale of half the stock could raise 1.5 billion euros or more. An offering of that size would be the biggest French IPO since fund manager Amundi’s 1.67-billion-euro offering in 2015.

The lottery company is unlisted, while ADP is already publicly traded. The plan to sell shares in the airport company has run into political opposition, and an effort is under way to hold a referendum to block the privatization.

Proceeds from the asset sales would go to reducing the state’s debt and bulking up a government fund to invest in innovative technological and industrial projects.

The costs of the privatization process won’t impact the 2019 dividend payment, Pallez said during the press conference. FDJ plans to pay dividends of 122 million euros this year, at the same level as the last, she said.

The shareholding agency APE in July picked eight banks to manage the IPO of Francaise des Jeux. BNP Paribas SA, Citigroup Inc., Goldman Sachs Group Inc. and Societe Generale SA are leading the sale to institutional investors, with Credit Agricole SA, HSBC Holdings Plc and Natixis SA also participating, while CIC is co-lead manager.

FDJ’s IPO is getting interest from established fund managers, Pallez said.

The law that cleared the way for the sale of FDJ and ADP shares also allowed the state to reduce its holding in energy provider Engie SA, though the government has no plan to do so, an official said Oct. 4.

To contact the reporters on this story: Phil Serafino in Paris at pserafino@bloomberg.net;Angelina Rascouet in London at arascouet1@bloomberg.net

To contact the editors responsible for this story: Celeste Perri at cperri@bloomberg.net, ;Geraldine Amiel at gamiel@bloomberg.net, Kasper Viita, Blaise Robinson

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