By Matthieu Protard
PARIS (Reuters) - The French presidential election is set to lead to a shake-up of the state's extensive portfolio of corporate holdings, whether it is the broad sell-off promised by frontrunner Emmanuel Macron and Francois Fillon, or the expanded government role targeted by Marine Le Pen and Jean-Luc Melenchon.
Through the public bank Caisse des Depots and the holding companies Bpifrance and APE, the state has stakes in some 1,750 French companies with a combined value of nearly 100 billion euros, of which shares worth 77.4 billion euros were bourse-listed at the end of 2016. (Graphic of French state holdings: http://reut.rs/2oR8i0P)
The four top contenders have sharply different views on the role of the state in corporate life.
The centrist Emmanuel Macron, whom pollsters tip to narrowly win the first round on Sunday before a comfortable victory in the May 7 run-off, and the conservative Francois Fillon both want to sell non-strategic listed holdings to fund more forward-looking economic policies.
Macron wants the asset sales to feed a 10 billion euro fund to boost industry and innovation.
"In certain companies, the state needs to be present, notably in the nuclear industry, because they are an instrument of sovereignty," a spokesman for the Macron campaign said.
He said many other state holdings were no longer important levers of policy but merely the legacy of investments in industries once deemed innovative or strategic.
"This portfolio must be managed in an active manner and with a view to renewing our industrial capacity," he said.
The Fillon campaign takes a similar line.
"The proceeds of the asset sales must finance future-oriented investments such as high-speed internet, fund strategic stakes that the state wants to hold on to, and help reduce state debt," a Fillon spokeswoman said.
ENGIE ON THE BLOCK
In January, the public accounts auditor, the Cour des Comptes, said the state's current approach to public ownership was ineffectual, and that it could have more influence on corporate policy through regulatory agencies than through equity stakes.
Analysts say the state could reduce its 5.7 percent stake in the construction company Eiffage, its 28.65 percent stake in the gas utility Engie, its 50.63 percent stake in the airport operator ADP or its 23.05 percent stake in the telecom operator Orange.
In a recent note, analysts at Exane BNP Paribas said a new government could also sell all or part of the state's 17.58 percent share of Air France-KLM, its 13.1 percent of STMicroelectronics or the 4 percent it holds of oil services group TechnipFMC.
France has already sold 7.1 percent of Engie shares since 2015.
Analysts say the state's influence on Engie was already limited, and that similar disposals would have little impact on the companies' governance or strategy.
Some would, however, require changes to the law. Under current legislation, the state cannot cut its Engie stake below 33.6 percent for more than two years, and must retain a majority of capital and voting rights in ADP.
Engie and ADP both declined to comment.
The next president could also be tempted to reduce the state's 13 percent stake in car maker PSA, whose value has doubled since a government-led rescue in 2014.
The stake is currently being moved from APE to Bpifrance, although the latter's head, Nicolas Dufourcq, has said he wants to keep it at its current level.
Using double-vote provisions in the so-called Florange Law, the state could sell half of its stake while still keeping the same influence at board level.
ELECTRICITY THE EXCEPTION
Le Pen and Melenchon, for their part, say they have no intention of selling state holdings, but would on the contrary be ready to boost stakes in strategic companies if these came under threat of a foreign takeover.
Le Pen, widely expected to come first or second in the first round but to lose to whoever is her challenger in the second, wants to renationalise France's toll-road companies.
"Any government must reserve the right to buy into certain strategic companies that come under threat, or banks in case of serious financial crisis, and should even consider temporary nationalisations," a campaign spokesman said.
Not even Macron or Fillon is calling for a reduction in the state's 83.1 percent holding in the power utility EDF - worth about 18 billion euros and by far the largest in the portfolio - whose nuclear reactors produce three-quarters of France's electricity.
Successive Socialist and conservative governments have used this control to require EDF to keep power prices artificially low while at the same time imposing a high dividend pay-out.
Following a visit to EDF's Saint Laurent nuclear plant in January, Le Pen said she believed the utility must become 100 percent public again, although her electoral programme only speaks of "keeping state control".
The French government did spend months searching for private investors to help it recapitalise the 83.2-percent state-owned nuclear group Areva, whose reactor unit is being sold to EDF as part of a state-led rescue package for the nuclear industry that will cost the taxpayer an estimated 10 billion euros.
In the end, two Japanese companies agreed to buy a 10 percent stake in the nuclear fuel unit that has been spun off from Areva, but no other investors have been found for the group, whose equity has been wiped out by years of losses.
"Nobody knows the full cost of nuclear ... I have been industry minister and even I cannot tell you," Macron said this month.
(Writing and additional reporting by Geert De Clercq; Editing by Kevin Liffey)