World leaders have different ways of wooing CEOs and investors: Donald Trump tweets loudly and cuts taxes; Theresa May makes quiet promises to companies to help them ride out Brexit.
Emmanuel Macron’s method is grander: he invited 140 bosses for dinner at the palace of Versailles this week, an event that almost upstaged the elite’s traditional gathering in Davos.
It’s more than the action of an energetic new president keen to sell his reform agenda to the likes of Lloyd Blankfein or Sundar Pichai. Talk to bankers on the ground, and there’s a confidence that Paris will keep financiers busy this year -- and that bullishness looks justified.
Dealmaking already is picking up, albeit from a low base. The value of completed mergers involving a French target grew 80 percent last year to $71 billion, according to data compiled by Bloomberg. By contrast, European volumes were down, with deals involving a U.K. target dropping 58 percent to $169 billion.
Privatizations are likely to accelerate, judging by the warnings from the national audit body on the state of public finances and Macron’s hopes to use the proceeds from asset sales to build a 10 billion-euro fund for innovation.
There are the big, politically sensitive jewels like Aeroports de Paris, of course, but also swathes of less controversial assets like real estate. The government is sitting on some 60 billion euros of property, not all of it worth keeping.
There’s potential for more cross-border mergers as Macron pushes for more pan-European champions. The September tie-up between Siemens AG and Alstom SA’s rail businesses showed a willingness to strike deals in the face of opposition politicians’ hand-wringing over jobs and intellectual property. French banks may find little need to consolidate domestically, as Bloomberg View’s Pascal-Emmanuel Gobry has noted, but they’ve been flagged as potential buyers of Germany’s Commerzbank AG.
And even if Macron has shown himself to be ambivalent on potential swoops on national champions by U.S. giants like Amazon.com Inc., there isn’t much cash in the kitty to keep erecting firewalls against hostile bidders.
Domestically, there’s plenty of dry investment powder waiting to be deployed, as surveys suggest French firms are optimistic and expect business to grow this year. Construction is rebounding, and recruitment firms talk of strong demand. Last year, venture capital firms in France raised almost the same amount of funding as their U.K. counterparts, according to research firm Dealroom.co.
The hype shouldn’t cloud the reality that these are still early days. Macron’s flagship announcement of 3 billion euros of investments over five years is encouraging -- but it’s still only one-tenth what Apple Inc. is pledging at home. Paris’s push to win business from the City of London has been patchy. France is some way down the global foreign-investment and ease-of-business rankings. It’s an uphill climb.
But impressions matter. France’s old economic challenges are still there -- high government spending, a budget deficit, rigid labor laws and high taxes -- but Macron is gradually tackling them. It will take more than an amuse-bouche at Versailles to get CEOs to pull out their check-books. But culinary diplomacy should have its rewards.
This column does not necessarily reflect the opinion of Bloomberg LP and its owners.
Lionel Laurent is a Bloomberg Gadfly columnist covering finance and markets. He previously worked at Reuters and Forbes.
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