French Billionaire's Troubles Extend to Two Continents

(Bloomberg Gadfly) -- Billionaire Vincent Bollore's ride into the sunset, leaving his son Yannick at the head of his media empire, isn't going smoothly. A big bet on Italy by Bollore-controlled Vivendi has attracted political scrutiny, lawsuits and an activist investor. Now his historic family business in Africa is at the heart of a probe into corruption allegations. The ability of one of France's richest men to make deals and carry investors along looks constrained.

Bollore's African empire stretches over dozens of countries, with businesses from port concessions to logistics and railways, and the billionaire's political connections and media influence have helped it grow. But competition from deep-pocketed rivals such as Dubai's DP World Ltd. and Chinese firms is biting. The West African country of Benin recently snubbed Bollore SA in favor of a Chinese bidder for a railway project. Profit has suffered recently from a ramp-up in spending and a drop in activity in some African markets.

The allegations of graft are an extra worry, even without knowing how the case will unfold. The reported details aren’t entirely new, and revolve around campaign advice given to officials almost a decade ago. The company “formally denies” that the unit concerned did anything irregular. But the allegations add to the questions about Bollore's base on the continent. Do political friendships, which are an open secret, last forever? Does Bollore have the cash to stay ahead of the competition? Shares of the billionaire's eponymous holding company, where his African operations sit, have fallen 7 percent in three days.

Non-family investors are right to wonder whether the Bollore Group remains the audacious, deal-making gravy train they signed up for. Bollore's holding company has been flattered by the performance of its 20.5 percent stake in Vivendi. Stripping out the Vivendi stake, its revenue last year fell 6.5 percent and net income fell 5.8 percent.

Transportation and logistics' operating profit was flat, while that of oil logistics fell 33 percent. Debt has been rising for years, and recent reductions have largely happened thanks to the sale of his advertising agency Havas to Vivendi. Its gearing has been flattered again by the incorporation of the Vivendi stake in its financial statement.

So much depends on Bollore's ability to use Vivendi as a crutch. But it will surely take all of Bollore's wits to keep projecting an aura of control here too. His attempts to use Vivendi, via his minority stake, to stake out some kind of southern European media empire have suffered setbacks in Italy. Billionaire Silvio Berlusconi, hedge fund activist Paul Singer and the Italian government are all chipping away at his ambitions for Vivendi’s chunky holdings in Telecom Italia Spa and Mediaset Spa.

That Vivendi shares haven’t fallen over the past three days suggests that a less assertive Bollore might not be a bad thing for governance and investor returns at the company. But the Bollore Group is a different beast. Given that its business has often depended on personal capital, it's natural for investors to fret.

Lionel Laurent is a Bloomberg Gadfly columnist covering finance and markets. He previously worked at Reuters and Forbes.

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