"I wish it was a popular operation." It is with these words that the Minister of Economy Bruno Le Maire presented the next privatization of the French Games (FDJ). Before its IPO, the French are encouraged by the government to buy shares of the company, an opportunity open from Thursday, November 7. But is it really interesting?
According to industry experts, the FDJ offers a relatively low risk investment, thanks to its many assets. "It's a business quite disconnected from economic cycles: we play lotto and scratch games all the time, even in times of crisis," said economist Philippe Crevel, director of the Savings Circle. "Secondly, it does not need infrastructure or heavy investments, unlike EDF for example, so there is no industrial risk. And then it enjoys a captive market, thanks to its monopoly on lotteries, "he continues.
The good financial health of society also plays for it. In the first nine months of 2019, the second largest European lottery and fourth in the world registered bets increase by 8% compared to the same period last year, amounting to 12.54 billion euros, and its turnover to grow by 7% over one year, to reach 1.42 billion euros at the end of September.
Another economic data that can attract individuals, the rate of redistribution of dividends: 80% of the net result of the company is paid back to shareholders in this form. But, the FDJ giving back a lot of players and paying a lot of taxes, the net result of the company does not reach highs, and therefore dividends either. Last year, the latter amounted to 122 million euros, and should be identical this year, which is "relatively average" according to Philippe Crevel. The specialized magazine Income thus calculated that "investing 1,000 euros in FDJ securities offers a reasonable expectation of 1,222 euros after five years", assuming that the share price remains stable and a dividend yield of 4%.
A "good father placement"
We must not hope to become rich by acquiring shares of the FDJ. Because there is not his nature. "The company makes steady profits, which are not huge, but it has the advantage of stability and recurrence. It's a good family investment, medium or long term, "says Philippe Crevel.
Still, it's important not to put all your eggs in one basket, the economist recalls. "Do not put all your fortune in the FDJ, as in no other action. Obviously, you should not be dependent on a single stock, but you have to diversify your investments. "The stock market is inherently an uncertain environment. Thus, even if the FDJ action appears riskless, it is impossible to predict whether its price will go up, remain stable, or go down. And then the lottery company is not immune to an unforeseen, as "an opening of the sector to competition or a change of rules," warns Philippe Crevel, the latter may be for example in the case of the FDJ a hardening of taxes on gambling.
For individuals who would be willing to invest in the FDJ, another question arises: should you buy shares right away, during the popular subscription running between November 7 and 19, or wait a bit? Among the specialists, the opinions diverge. "It may be prudent for the prudent investor to miss the introduction and the first weeks of trading to see how the FDJ has been welcomed by the markets," said Nicolas Chéron, head of market research for online broker Binck. en, in an analysis dedicated to the FDJ. While for Philippe Crevel, "as much buy shares as soon as the securities are issued".
A haircut and a free action for ten bought
In any case, the government is pushing private investors not to wait, by granting benefits to those who buy shares as soon as the popular subscription period. They will be entitled to one free share for every ten bought and held for 18 months, and a discount of 2% on the stock price compared to that paid by institutional investors. "Always that's taken" according to Philippe Crevel.
We are delighted to involve the French in the privatization project of @FDJ ; we hope to share with you a good long-term history, alongside the State which will remain a reference and long-term shareholder. https://t.co/llBkydw0RD
– Stéphane Pallez (@stephane_pallez) October 24, 2019
But the size of this good plan will depend on "the final price attributed to the action," explains Parisian Edouard Rousseau, an analyst at the Montsegur Finance Management Company. Many specialists keep in memory the previous EDF, whose action was introduced on the stock market at 32 euros in November 2005, its price has since fallen to 9 euros. If the price of the FDJ stock will be set at the end of the popular subscription, depending on the supply and demand, the Minister of the Economy, Bruno Le Maire, has already announced at Parisian that it would be between 16.50 euros and 19.90 euros ..