March 27, 2013 / 1:31 PM / 5 years ago

UPDATE 1-French govt raises 449 mln eur from Safran stake sale

* France sells 3.12 pct stake, keeps 27 pct of Safran

* Shares in Safran up fivefold in past four years

* French govt to inject cash into small businesses (Recasts adding detail, comment, background)

PARIS, March 27 (Reuters) - The French government has raised nearly half a billion euros from the sale of shares in aerospace group Safran, money it plans to inject into small businesses as it battles to put some life back into the stalled economy.

Finance Minister Pierre Moscovici said the sale, announced late on Tuesday, of a 3.12 percent stake in Safran to institutional investors had reaped 448.5 million euros ($577 million), leaving the state with a strategic 27 percent stake.

Funds from the sale of 13 million Safran shares would be invested in new economic sectors, in part via a public investment bank the government hopes will spur job creation.

“The proceeds ... will be used to finance new and productive investments geared towards revitalising the economy,” he said on Wednesday.

The move, which knocked Safran shares down 2.6 percent to 34.56 euros by 1239 GMT, comes as cash-strapped governments across Europe are looking at raising funds by selling shares.

European aerospace giant EADS said on Wednesday that Spain was planning to sell a 1.15 percent stake in it, reducing its stake towards 4 percent.

Separately, Belgium was reported to be considering selling off stakes in BNP Paribas or Belgacom as it looks for ways to rein in its budget deficit.

The Safran sale, locking in a more than fivefold rise in the firm’s share price since March 2009, was managed by Societe Generale and set at an offer price of between 34.5 and 34.8 euros a share, a market source told Reuters.

The stock had closed at 35.49 euros on Tuesday, marking an 8.9 percent rise since the start of the year.

A source close to the finance ministry said there was “no pre-set agenda” for any further sale of state assets, adding that the Safran sale had been decided a while ago and the government had been waiting for the right market conditions.

There is no decision yet on what sectors the public investment bank would invest in with the money raised from the Safran shares and whether some could go to the defence sector, the source said.

Socialist lawmakers had been hoping that any sale of government shares in the aerospace or defence sector might raise funds that could ease the strain on the national defence budget.

President Francois Hollande is mulling big cuts to the defence budget as he battles to reduce state spending by 60 billion euros over his five-year term. ($1 = 0.7777 euros) (Reporting by Catherine Bremer; additional reporting by Ingrid Melander; editing by Keiron Henderson)

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