State Enhanced Capitalism: Caisse des Dépôts et Consignations

Ashby Monk

In keeping with this week’s emerging theme on the independence of SWFs, Ben Hall of the FT has a nice article on the Caisse des Dépôts et Consignations (CDC). The CDC, which Hall refers to as “arguably the world’s oldest sovereign wealth fund,” has apparently been asked to bail out several struggling French firms over the past few years. The result? the CDC experienced its first loss in nearly 200 years of operations.   Clearly, investing in struggling companies is not a money maker:

“Of the writedowns, €2bn related to CDC’s investments in Dexia, the Franco-Belgian bank it helped to rescue from collapse last year with an injection of capital, and in Eiffage, the construction and concessions group in which it built up a 20 per cent stake to help thwart an attempted takeover by Sacyr of Spain.”

Indeed, the CDC has been an important French tool during the financial crisis:

“Although theoretically independent from the government, the finance house is often encouraged by the state to protect French companies from foreign takeover by acting as a long-term core shareholder.”

The CDC also owns and partially manages the new French SWF, the Strategic Investment Fund, designed to protect French companies from foreign predators.

In France, where  state enhanced capitalism is at its best, SWFs have their role to play.

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This website is a project of Professor Gordon L. Clark and Dr. Ashby Monk of the School of Geography and the Environment at the University of Oxford. Their research on sovereign wealth funds is funded by the Leverhulme Trust and The Rotman International Centre for Pension Management.

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