Float fails to light up French power giant EDF

Shares in the state-controlled French power giant EDF debuted on the markets yesterday after the world's biggest initial public offering this year. The French finance ministry said the 15 per cent sale had raised €6bn (£4bn). The float valued EDF at about €60bn, making it Europe's largest quoted utility company, ahead of Germany's E.ON.

The stock barely rose above the €32 issue price paid by individual investors when it started trading on the Euronext stock exchange at midday and closed unchanged on the day. Shares were down compared with the institutional flotation price of €33. Traders said the shares were being propped up by banks behind the deal. Calyon, BNP Paribas, Rothschild, ABN Amro and Morgan Stanley were involved in the float.

About 53 million EDF shares changed hands on their first trading day, or 28 per cent of the company's newly issued stock of 188 million shares. The stock saw high demand from private investors while some fund managers and analysts complained that the price was excessive. Thierry Breton, the French finance minister, had announced on Friday that individual investors would receive 60 per cent of the shares and institutions 40 per cent, instead of the 50-50 split initially envisaged.

The government had recently come under fire for selling off state-owned assets too cheaply. By contrast, shares in the natural gas distributor Gaz de France surged more than 20 per cent on their market debut in June, which was heavily oversubscribed by institutional investors.

M. Breton, who had hailed the part-privatisation of EDF as a success when he set the price, yesterday brushed aside journalists' questions on the debut. The float had been opposed by unions and staff in months of skirmishes with the conservative government, which now faces potential embarrassment if millions of private investors do not get a decent return. The Socialist Party leader Francois Hollande pledged to renationalise EDF if the party returns to power.