Call to Establish French-Saudi Investment Fund

French Minister for Industrial Recovery Arnaud Montebourg has called for the creation of a Franco-Saudi investment fund, similar to the model of the recent Franco-Qatari and Franco-Chinese funds.

While visiting Riyadh on Sunday, the French Minister expressed his desire to create a joint Franco-Saudi investment fund. “I will make a proposal to establish a binational Franco-Saudi fund, to encourage investment and protect the economic interests of both countries,” the minister was quoted as saying. “We are short of capital, the Saudis have capital, we have the technology and it would be a trade-technology capital,” Montebourg continued. According to him, the fund will be built on the model of the Franco-Qatari and French-Chinese funds, both of which were launched in 2012.

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The funds encourage joint ventures between the nations. For instance, on November 30, Qatar Holding, a branch of the sovereign wealth fund of Qatar, and the Caisse des Dépôts (CDC) – the financial arm of the French state, announced the signing of a protocol to create a 300 million euro fund. Divided equally by the two partners, the Franco-Qatari fund is designed to invest in French SMEs in sectors with high growth potential.

Two months earlier, in September, the French and Chinese governments launched a development capital fund worth 150 million euros, divided again equally by the CDC and its Chinese counterpart, China Development Bank (CDB). By investing equally in French and Chinese companies with strong growth potential, this fund aims at promoting French SMEs in the huge Chinese market, and in parallel, to facilitate relations between Chinese and French SMEs. It has already made the first two investments, one worth €10 million in FDS, a French company specializing in seals for the oil and gas industry, and another €15 million in Kids Land, a Chinese toy distributor.

The launches of these two funds fall with the strategy of the Long-Term Investors Club, founded at the initiative of the CDC in 2008. Due to the global financial crisis cash deposits decreased, indicating “the fragility of the short-term investment approaches” and hence the “beneficial role of long-term investors, who are able to engage in long-term strategic sectors such as infrastructure, energy and housing.”

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