Sarkozy Fund to Raise €6 Billion for Investments

Birth of the “official” French Sovereign Wealth Fund: French President Nicolas Sarkozy said the government and a state-owned lender will raise €6 billion ($7.6 billion) to create a sovereign fund aimed at protecting and developing the country’s “strategic companies.” (Not sure what the French consider their previous bail outs investments in France-based companies then).

The state will also endow the fund with €7 billion in minority stakes it already owns, including 15% in carmaker Renault SA and its holding in Air France-KLM Group. State-owned bank Caisse des Depots & Consignations (a true pioneer in SWFs) will also add about €7 billion in assets to the fund.

In its first purchase, the fund will invest in Daher, a family held maker of equipment for the airplane, nuclear, defense and auto industries. The fund, together with an aerospace investment group called Aerofond will put 85 million euros into Daher. The capital will help it invest 200 million euros more in the next five years to build parts for Airbus SAS, Dassault Aviation SA and other aerospace companies.

The fund will invest in companies for about 2 to 10 years, taking majority stakes in companies only in very rare cases.

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