* French industry minister eyes EDF, GDF Suez stake sales
* Finance minister plays down possible stake sales
* Shares unchanged; sale could raise 4.2 billion euros.
* Funds could go to other industries - government source
(Adds valuation, impact on companies,)
By Geert De Clercq and Jean-Baptiste Vey
PARIS, April 15 The French government could
raise as much as 4.2 billion euros ($5.5 billion) by trimming
its stakes in utilities EDF and GDF Suez,
money it may invest in other industries to boost the economy.
Without directly identifying either company except by the
size of the national stake in each, French industry minister
Arnaud Montebourg on Sunday raised the idea of reducing that in
electricity utility EDF to 75 percent from 84.4 percent, and in
gas utility GDF Suez to 33 from 36.7 percent.
"We are in the process of looking at what would be
possible," a senior government source said, adding the goal
would be to invest in new industries rather than plug budget
In March, France raised nearly half a billion euros from the
sale of a 3.12 percent stake in aerospace group Safran
with a view to inject the funds into small businesses. The sale
left the state with 27 percent in the firm.
France owns around 55 billion euros' worth of stakes in
listed companies, but socialist French President Francois
Hollande has made little mention of asset sales.
This is the second time Montebourg, one of the government's
most left-wing ministers and noted for expressing dissident
views, has spoken about partial privatisations without a swift
Finance minister Pierre Moscovici, interviewed on state
radio earlier, did not mention possible stake sales, but a
source close to him said there was no particular plan to sell
and only the finance ministry had authority over such disposals.
"If the state considers some assets are not strategic and
could be sold to finance other investments that would be
beneficial to the economy, there is nothing to stop us from
doing that," the source said on Monday.
A 10 percent stake in EDF, at current prices, would raise
about 3 billion euros, while a 3 percent stake in GDF Suez would
raise about 1.2 billion euros.
Both shares barely moved on Montebourg's comments. EDF
closed up 0.1 percent, GDF Suez down 0.1 percent. The CAC40
index was down 0.5 percent.
Some analysts say a selloff of French state utility holdings
would look like a panic measure. EDF stock is down 81 percent
from its 2007 high, while GDF Suez is down 64 percent from a
2008 high, despite slight recoveries in recent weeks.
While Europe's bourses are at their highest levels since
early 2009, utilities have been among the worst performers.
GDF Suez shares are trading at just 65 percent of book
value, the worst in the Euro Stoxx Utilities Index.
Power demand is falling because of the economic crisis and
the drive for energy efficiency, utilities are carrying billions
of debt following a wave of consolidation, and the renewable
energy boom is damaging their business model.
"This may not be a good time to sell, but frankly, because
of regulation and falling consumption, there is not much good
news in the pipeline for the sector," said Colette Lewiner, head
of utilities at French consultancy firm CapGemini.
The government needs to keep 33.33 percent in GDF Suez to
retain a blocking minority against changing company statutes or
capital operations. But it could further reduce its EDF stake,
as by law it needs to own a minimum 70 percent.
For the companies, the size of government stakes is less
important than government regulation, because their earnings
depend strongly on regulated tariffs for gas and electricity.
But "(Montebourg's) comments will weigh on the stock price,
as it means there will be an overhang of paper," said Julien
Desmaretz at broker Bryan, Garnier & Co.
($1 = 0.7635 euros)
(Additional reporting by Benjamin Mallet and Catherine
Bremer/Ruth Pitchford; Writing by Geert De Clercq; Editing by