More than 500,000 French people participated in the IPO of La Française des Jeux. This high level of participation shows that the French may have regained their taste for investing.
Discover the world’s most interesting finance news with the Born2Invest mobile app. The app provides its readers with access to the latest news in the stock market, finance, global business, and also trending topics like bitcoin, cryptocurrency, and crowdfunding.
La Française des Jeux: a remarkable popular success
It took a unique event to rejuvenate French investor confidence, namely the IPO of La Française des Jeux. It had been 14 years since the French State had privatized one of its companies through private savings. The last operation of this scale was the privatization of EDF in 2005.
More than 500,000 French individuals subscribed to this project, offering a total of $1.78 billion (€1.6 billion) to acquire shares in the FDJ. This was more than double the amount available for allocation. Above an amount of $2,300 (€2,000), only 10% of the demand met the offer. One individual placed an order for $3,300 (€3,000) and finally received $2,400 (€2,100) in securities, $1,000 (€900) of which were returned to him. There have been few cases in France where such a high level of over-subscription by individual investors has been seen.
At the end of the operation, many people would have liked to have invested more money, and for good reason. From the first day of listing, the new shareholders of the FDJ benefited from an increase of more than 10% in the value of their investment. Betting on the actions of the FDJ can, therefore, be more judicious than filling out lottery grids.
Equities, crowdfunding, crypto-assets: the investment is back on the market
However, this popular success was far from being a foregone conclusion. The traumas of 2001 and 2008 have not yet been forgotten. Twelve years ago, France had seven million individual investors exposed to the equity markets, while in 2016 there were only three million. Therefore, more than half of French investors have left the market in the past eight years.
However, since 2017, there had been some signs of a reversal of the trend. Driven by the persistence of low-interest rates and the decline in life insurance yields, at the end of 2018, the number of French investors owning shares was once again close to four million. With the success of the FDJ’s initial public offering, there is no doubt about it: the situation now seems to be reversed and investors are returning to the markets.
In addition to equities, other forms of investment have also gained in popularity in recent years, including crowdfunding and crypto-actives. The latter, which are based on the ultra-secure technology of the blockchain, is not limited to Bitcoin and may represent a new way of investing in companies. These investments attract a clientele that is generally younger than in the equity markets, willing to assume a high level of risk in return for equally high earnings prospects.
A good way to avoid low rates
This return of the French people’s enthusiasm for investment comes at the right time, in a context in which the safest investments offer almost no returns, with no prospect of improvement. The Livret A passbook savings account, the new PELs, and many euro-denominated life insurance funds now generate less than 1% net income per year, a figure lower than inflation. In other words, the money invested in these supports devalues and causes a loss of purchasing power for savers.
It has, therefore, become crucial for individuals to diversify their investments by seeking better returns. The government itself has tackled this difficult task by adopting the Pacte law in 2019, a real package of measures facilitating, in particular, private investment in small businesses. The aim is twofold: to channel French investment towards more judicious investments in the current context and to facilitate the financing of the “real” economy, which creates jobs.
The privatization of the FDJ is in line with this same logic, its goal being to bring the French back into the investment world. We know that the French are already strong savers since 14% of their income is set aside at the end of each month on average. The key now is to help them become better investors.
DISCLAIMER: This article was written by a third party contributor and does not reflect the opinion of Born2Invest, its management, staff or its associates. Please review our disclaimer for more information.
This article may include forward-looking statements. These forward-looking statements generally are identified by the words “believe,” “project,” “estimate,” “become,” “plan,” “will,” and similar expressions. These forward-looking statements involve known and unknown risks as well as uncertainties, including those discussed in the following cautionary statements and elsewhere in this article and on this site. Although the Company may believe that its expectations are based on reasonable assumptions, the actual results that the Company may achieve may differ materially from any forward-looking statements, which reflect the opinions of the management of the Company only as of the date hereof. Additionally, please make sure to read these important disclosures.
First published in Pere la Fouine, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.
Although we made reasonable efforts to provide accurate translations, some parts may be incorrect. Born2Invest assumes no responsibility for errors, omissions or ambiguities in the translations provided on this website. Any person or entity relying on translated content does so at their own risk. Born2Invest is not responsible for losses caused by such reliance on the accuracy or reliability of translated information. If you wish to report an error or inaccuracy in the translation, we encourage you to contact us.
Strategic acquisition in the German fintech sector
Lehner Investments has signed an acquisition deal with the FinTech company Catana Capital.11.5 million shares will be issued at the...
The interest rate threshold keeps dropping
Our Nation's debt to GDP ratio has now climbed above 130%. More importantly, that debt has surged to equal 800%...
ESG ETFs were that blockbuster fund in 2020
Equity ETFs saw the largest inflows in 2020, with $67.2 billion (€55.3 billion). After a period of risk aversion and...
Kia Morocco, between rebirth and ambitions
After a good progression in 2020, the importer of Kia continues its basic strategy aimed at restoring the brand's aura...
Bitcoin price dump may have been triggered by largest BTC mining pool
From January 15th, in particular, the amount of bitcoin outflows from F2Pool, currently the largest mining pool with about 15%...
Crypto7 days ago
Is the course of Bitcoin striving for stability
Featured7 days ago
How the coronavirus pandemic helped setting records on the bond market
Crowdfunding6 days ago
Italian real estate crowdfunding doubles funding in 2020
Africa7 days ago
Financing companies in Morocco: between questions and actions