Escape me and I will follow you. The Minister of the Economy said he was ready, Thursday May 2, to fight to keep TotalEnergies in France. An energetic reaction, on BFMTV, to the paving stone thrown in the pond of the Parisian financial center by Patrick Pouyanné: in an interview with Bloomberg last week, the CEO of the oil group declared that he was considering choosing New York as the main place of listing. Enough to put Bercy in turmoil. “This announcement is more important than that of the rating agencies!”, quipped Pictet AM’s investment strategy advisor, Christopher Dembik, a few hours before the Fitch and Moody’s judgment on French debt.
Bruno Le Maire can rest assured, only a change of stock market is being studied at this stage by the charismatic boss of TotalEnergies, who will submit his conclusions to the board of directors by September. There is therefore no question of exiling the headquarters across the Atlantic. French heavyweight in the strategic energy sector, a historic member of the CAC 40, the century-old group is used to being vilified, including by public authorities. For its investments in new “fossil” projects. For the low taxes paid in his country of origin. For its XXL profits, which have become “surplus profits” thanks to the inflation of energy prices. Or for its generous shareholder remuneration policy, reclassified as “superdividends”. The reflection launched by the group about Wall Street sounds like fed up. “The nervousness has been growing for some time at TotalEnergies,” says an investment banker citing, among the subjects of strong tension, the planned taxation on share buybacks but also the matter of the proposed establishment of a research center at Polytechnique, abandoned in 2022 under pressure from associations but also from students and professors at l’X.
Decarbonize or support the transition
The reactions to this still hypothetical departure for the American stock market reveal France’s ambivalences towards this national champion that we love to hate. However, as Patrick Pouyanné summed up: “It’s not a question of emotion. It’s a question of business.” The scenario is nothing extravagant. Other European heavyweights have taken the plunge, such as the German giant Linde, which deserted the Dax in 2023 in favor of Wall Street. Pragmatic, the boss of TotalEnergies identified the forces present. In 10 years, continental European shareholding has shrunk from 51% to 44% of the capital – 26% French at the end of 2023. At the same time, North Americans have strengthened, from 30% to 40%. Within the institutional shareholding, excluding employees and other small holders, the share of the United States – and marginally of Canada – even increased from 33% to 48%.
To explain this scissor effect, Patrick Pouyanné invoked the ESG argument, these management criteria linked to the environment, social and governance: European investors, no longer constrained by decarbonization objectives, are offloading in favor of Americans less cautious on the subject. Shaken in his convictions, Jean-Benoît Gambet, the founder of the consulting firm Moonshot, a specialist in sustainable finance, asked himself on LinkedIn: “The simplest action to massively decarbonize your portfolio is to exit the oil companies. Usually, (they) represent more than 50% of the carbon intensity of a classic equity portfolio. You take them out and you reduce your carbon intensity by at least 50%. Like all funds. ISR labeled [NDLR : Investissement socialement responsable] now, which exclude oil companies. The negative effect is to lose European competitiveness. How can we succeed in better supporting companies in their transition without necessarily disinvesting in them?”
Huge question. TotalEnergies’ efforts to evolve towards a more sustainable model are considered insufficient by the most committed NGOs and shareholders. They are nevertheless considerable. Last year, a third of investments, or 5 billion euros, were spent on low-carbon energies, an amount which tends to increase. While Shell and BP have eased off on the subject, the Frenchman “has stood out for the consistency of his speech since 2020”, welcomes Oddo BHF analyst Ahmed Ben Salem. With a certain success since “TotalEnergies displays better profitability than its American competitor Exxon which only invests in oil and gas”, adds the expert.
Loss of sovereignty “from above”
But the “green” argument is not the only explanation for the weakening of Europeans’ share of the energy giant’s capital. For political scientist Maroun Eddé, the movement is deeper. “I see it above all as confirmation of a revolution that has been taking place for around twenty years, that of the passage of the majority of our capital into the hands of foreign investors. Apart from the four major luxury groups, the CAC 40 is approximately 50% owned by international funds, led by BlackRock and Vanguard. Deindustrialization is a loss of sovereignty from below; we have talked less about this loss of sovereignty from above, that of capital.
For the author of The destruction of the state (Bouquins, 2023), this situation results from the wave of privatizations carried out in the 1990s to make up for public deficits. “There was not enough French capital on the other side,” recalls Maroun Eddé. “It is easy today to demand action from the government on this group that it has not controlled for more than twenty years. the hearing of April 29 [NDLR : le PDG était convoqué dans le cadre d’une Commission d’enquête]the senators nevertheless seemed surprised that Patrick Pouyanné told them that he did not work for them!”
The attractiveness of the Paris square in question
But what will become of the Paris market if TotalEnergies escapes from it? At a time when the Renaissance deputy Alexandre Holroyd, led by Bercy, sees his proposed law on financial attractiveness discussed in Parliament, the hiatus is glaring. The oil group is the fourth capitalization of an index dominated by LVMH, Hermès and L’Oréal. Giant trees hiding a sparse forest. “There is a disconnect between speech and reality. Certainly, Paris has benefited from Brexit, especially in terms of jobs. But there are no more IPOs, liquidity on small and mid-caps is zero, notes Christopher Dembik. Paris and continental Europe are lagging behind. All capital flows go to the United States. From TotalEnergies’ point of view, listing in New York is a good choice for value creation. “.
If the group crosses the Atlantic, the risk is that it will open the way for others. However, it is not an easy choice. TotalEnergies is already listed on Wall Street through ADRs, securities which simply reflect Parisian action but are not of interest to investment funds, due to lack of liquidity. If the listing becomes full and complete, Pascal Quiry, professor of finance at HEC, warns that “the stock will be subject to a whole bunch of SEC rules [NDLR : le régulateur de la bourse américaine] such as the Sarbanes-Oxley Act”, intended to better protect investors.
The American stock market nevertheless offers undeniable advantages. “A larger market, with a more diversified investor base, more liquidity, increased visibility on the international scene,” says Yann Azuelos, head of financial management at Mirabaud. “With the resulting better valuation.” A crucial point for any listed company. Patrick Pouyanné explained it to senators via A + B: “We have exactly the same quarterly results as a company like Chevron and our stock market valuation is 200 billion euros, compared to 300 billion” for the American oil group. The TotalEnergies share may be moving at historic levels – supported, it is true, by share buyback operations – but it could be worth much more in New York.
The untraceable “French-style” sovereign fund
Encouraging the financing of French champions would require a tax framework favorable to long-term investment in shares. But here again, the gap between intentions and reality is glaring. “That there is a Liquid Livret A, capped at around 20,000 euros, okay. But beyond that, why grant colossal tax advantages to life insurance funds in euros? We must not complain, then , that French companies are less well valued”, annoys Pascal Quiry. The co-author of “Vernimmen”, a bible for finance students, also regrets the abortive creation of a pension fund in France in 1997. “It would have made it possible to generate this rare resource which is long-term savings”, supports Maroun Eddé. As for Bpifrance, the public investment bank, it seems insufficiently endowed with capital to play the role of a powerful sovereign fund, like those of the Gulf countries or Norway. Will the union of capital markets, which Paris is calling for, make it possible to reverse the trend?
While waiting for this ambitious project to emerge, the debate around TotalEnergies finally crystallizes the contradictions of a Europe which proclaims its desire for sovereignty, but reveals itself incapable of supporting its star companies. The story told by Patrick Pouyanné during his senatorial hearing is eloquent in this regard. “We were a manufacturer of solar panels, he recalled. We experienced the cycle of investing in solar panel factories in Europe and having to close them all because [l’Union européenne] decided in 2017 to lift all customs barriers”. To guarantee “the lowest possible cost of solar energy”, Brussels opened the doors of the European market to Chinese panels. Or how to shoot yourself. And the CEO of TotalEnergies compared this “political choice” to the tax advantages granted by Joe Biden to manufacturers who favor the purchase of panels made in America… “We need Total,” insisted Bruno Le Maire on BFMTV Mais TotalEnergies. does she need France?
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