Jacquespot

France has its biggest IPO since 2005

Image source: Incomible - Shutterstock

What's going on?

French lottery operator Francaise des Jeux held its initial public offering on Thursday, and it got lucky: its shares soared 14%.

What does this mean?

Until Thursday, the French government owned 70% of the lotto firm. But in an effort to raise some money to pay down the country’s debt, it decided to quit while it was ahead. The government sold 52% of the company and earned over $2 billion in the process – making this the biggest French IPO since 2005.

Investors seemed to like the look of the company’s profit growth, as well as its plan to pay 80% of its profit as a dividend next year. Its prospects for the future might be just the ticket too: there are hopes it’ll grow in Africa and online, as well as sell new services via its French retail networks.

Why should I care?

For markets: Fortunes turn on a dime.
Gambling is a risky business for investors, as firms’ success is dependent on regulation. But since the government still owns part of Francaise des Jeux, it’s in a stronger position than most. The same can’t be said for Britain’s William Hill: the gambling company reported a big revenue drop in its retail division on Thursday, which it blamed on new caps imposed on betting machines. Hill is shifting focus to online gambling as a result, but rumors earlier this month that online might also become more heavily regulated sent the company’s shares down 12%. It’ll pretending it’s a true-blue yank in no time, then: America’s relaxing its gambling regulations, expanding a market Hill’s already started to capture.

The bigger picture: Private doesn’t mean perfect.
A company recently sold off by the UK government saw its shares fall 14% on Thursday. Royal Mail, the British postal service, warned it might make a loss next year as it struggles to transform from a letter-deliverer to a parcel-deliverer. Analysts also blamed strong unions for its inability to modernize – a problem France famously struggles with too…

Originally posted as part of the Finimize daily email.

The top 2 financial news stories in 3 minutes. Join over 600,000 Finimizers

Read next

First Lady

Sign up to Finimize

Get the two most important global financial news stories each day. Sent at midnight UK time.

Get started with one email a day

The top financial news stories in 3 minutes.