The rising concerns over human rights in France: An insight into the current escalation.
In the dynamic world of corporate finance, French companies have been making headlines with a series of successful rights issues this year. The market, characterized by periods of volatility, has presented both challenges and opportunities for these companies.
The journey began in late May, when Air France-KLM launched its rights issue as part of the group's recapitalization strategy. The transaction, worth €2.256 billion, attracted an overall subscription rate of 187%, demonstrating strong investor confidence. The deal was initiated after positive newsflow on the group and received a great deal of interest from investors, according to Alexis Bauza at our website Corporate & Investment Banking, which was the joint global coordinator for the Air France-KLM rights issue.
The proceeds from this rights issue will be allocated to repay a large portion of French state aid received in 2021, while the deal provided an opportunity for the group to welcome a new long-term partner to its shareholder structure, with CMA-CGM now holding a 9% stake.
Air France-KLM's success was not an isolated incident. French corporates have raised €6 billion through rights issue transactions year-to-date, surpassing the €3.5 billion raised in the same period of 2021. Six rights issues have been staged by French corporates year-to-date, compared to ten deals in the same period of 2021.
One such deal was Faurecia's rights issue, launched in early June to finance the acquisition of Germany company Hella, an announcement made in August 2021. Another significant event was Societé Générale's specialist vehicle leasing subsidiary ALD Automotive, set to launch a €1.3 billion rights issue in the second part of 2022 to finance the acquisition of LeasePlan announced in January.
The EDF rights issue was finalized in April, with the announcement made in mid-February. The French government participated in the transaction, but its role was restricted to merely participating in the transactions.
The market's volatility is expected to continue, and clients are advised to be at the ready and poised to seize any windows of opportunity. Deals can be executed in a short timeframe, such as talks with shareholders on the disposal of listed holdings in blocks and with corporates for the issue of convertible bonds.
The success of these rights issues is a testament to French corporates' ability to navigate the recent crisis. Air France-KLM, for instance, reported much higher first-quarter earnings than expected and anticipates a successful summer season, demonstrating the group's achievement in navigating the crisis.
With insider trades of shares worth more than 6 billion euros in the first six months of 2022, it is considered likely that 2022 will be a record year for insider trading in France. The market's dynamics require finding windows of opportunity, and it is important to be poised to take advantage of these openings.
Air France-KLM's rights issue, along with others, has put French corporates in a strong position to meet their financial targets. The Air France-KLM rights issue, for example, has allowed the group to be free from nearly all European Commission-imposed restrictions, putting it in a strong position to meet its financial leverage target for 2023 by bolstering its equity and cutting back net debt.
In conclusion, the French corporate sector has shown resilience and adaptability in the face of market volatility, successfully raising funds through rights issues and positioning themselves for a strong future.
