Is it safer to invest in state-owned companies? And which stocks are (not) interesting? “A high dividend is not an immediate advantage” | MyGuide

The Flemish government announced that it was preparing for a exit from Gimv, or the Regional Investment Company for Flanders. If it depends on the government, those shares will be sold soon.

Gimv used to be GIMV. The name was the abbreviation for Regional Investment Company for Flanders. The company was founded in 1980 by the Flemish government to help finance the foreign expansion of Flemish companies. After all, in the crisis years of the 1980s it was not so easy for Flemish companies to find money. More than once Gimv helped a company out of trouble. Today, for example, there would have been no mention of Barco (a Belgian company specialized in projection technology, ed.) if the Gimv had not been there. Kinepolis, Mobistar (now Orange Belgium) and – yes – Lernout & Hauspie also received money from Gimv.

Over the decades, Flanders has increasingly privatized Gimv. If one still owned 100 percent of the shares in 1980, that interest fell to 84.8 percent in 1995, 70 percent when Gimv was floated on the stock exchange in 1997, 40 percent in 2005 and 27.7 percent now. Flanders currently still has 7.5 million Gimv shares, so in fact every Fleming has already invested in one Gimv share.

In recent years, the company has transformed into a dynamic and professional investor in about 60 companies. Gimv no longer invests only in Flemish companies, but also in companies from the Netherlands, Luxembourg, France, Germany, Austria and Switzerland. Today, an investment in Gimv is therefore a very good alternative to an investment in an equity fund. If the Flemish government were to sell its shares now, I think it would be doing a bad thing. Buying a Gimv share yourself is doing a good thing. You barely pay 43 euros for one share. In November 2021 that was still 58 euros. That record price will undoubtedly return to the price board at some point.

However, not all public companies are worth an investment. Take Proximus now. The company that used to be known as Belgacom and RTT is a former government monopolist in telecom. Across Europe, the government took care of that sector because investments in telecom were so heavy that no private company was willing or able to afford the investments. The disadvantage of a monopolist, however, is that it must not behave commercially. The customer has nowhere else to go. And so customers in RTT had to take into account long waiting times before they could make a call.

Thanks to the competition, Proximus has already improved a lot, although the service in the telecom industry remains substandard. In addition, the company is groaning under the heavy investments in cable and 5G, which initially cost a lot of money and will only yield a profit in the long term. Not only Proximus suffers from this, also sector peers such as Telenet farm less well as a result. I would therefore not invest in Proximus. As a Belgian, you already indirectly own more than 15 shares of Proximus, because our country still holds an interest of 53.51 percent in the company, good for almost 181 million shares!

A Proximus share was still worth 32 euros in 2017. Now that is barely 9.2 euros. The decrease in value for our country will therefore amount to more than four billion euros. So our federal government is not exactly a good investor. Anyone who thinks it is safer to invest in a large public company should think twice. On the one hand you have a party that can provide extra money if necessary, but on the other hand you are in a company where the creation of shareholder value does not seem to be a priority.

You get the same story at bpost. Every Belgian is a customer of that public company. But if you ask who is satisfied with the services bpost provides, then that is rather disappointing. Even the heavy subsidies that the listed company receives – between 2023 and 2027 we are talking about 750 million euros – are not of such a nature to make bpost a thriving company.

Five years ago, a share cost almost 28 euros. Today that is barely 5 euros. A bargain? Forget it. It is much better to invest in companies that do succeed in fulfilling their core activity properly. Every year bpost tries to counteract the decline in income by raising prices. If that is a solution at all, it is only for the short term. In the long term, the company can still expect stiff competition from peers who know how to provide service.

The federal government has a 51.04 percent stake in bpost, good for about 102 million shares or 8.7 shares per compatriot. The loss of value on that position since the record price of 28 euros in February 2018 amounts to 2.3 billion euros. That loss was tempered by the dividends that bpost has paid in the meantime.

That is often still a characteristic of public companies. They pay out dividends that the government gratefully uses to reduce the budget deficit. But the money that these public companies pay out to their reference shareholder can of course no longer be used by the company to invest in future growth. A high dividend is therefore not immediately an advantage.

We also saw the same at the listed holding company Tessenderlo. It is true that the Belgian government was not the largest shareholder there, but the French one. It mistreated the then chemical company for a long time and kept demanding high dividends, even though Tessenderlo didn’t have the money for it. That money was borrowed from the banks at high interest. Good for those banks, but not for Tessenderlo and the shareholders who hoped for price gains. Only when the West Flemish businessman Luc Tack took over the 27.52 percent participation in Tessenderlo from the French government, now ten years ago, did the Belgian company start to score again. Since then, turnover, profit and share price have increased. The former ‘state company’ Tessenderlo therefore has a bright future again and is certainly worth buying.

According to some, the share of the National Bank is also a bargain. But the shareholders of the central bank have suffered for decades from the main shareholder, the Belgian State, which holds half of the shares. It is even quite bizarre that a central bank is listed on the stock exchange. This has already led to situations in which there is uncertainty about who is entitled to certain assets of the National Bank: the listed company, and therefore all shareholders, or just the Belgian State?

The share price fell from 4,000 euros in 2010 to 660 euros today. Our government has 200,000 shares, which means that the value reduction for the government amounts to 668 million euros. That’s not the biggest concern. Due to the rise in interest rates and the enormous loss of value on investments in bonds, our National Bank would continue to book large losses in the coming years. A National Bank share is therefore certainly not a safe or secure investment.

Some shareholders disagree. The green hats movement, for example, has been campaigning for years for more respect for the minority shareholders of the National Bank. She even files lawsuits. So far, they have yielded nothing (yet).

An investment in listed public companies is certainly not for the heart sufferer. The large losses at Proximus, bpost and National Bank have demonstrated this. On the other hand, an investment in a company where the government does not have too much control is interesting. For example, I am a shareholder in Tessenderlo and Gimv, two listed companies that were once ‘under the burden’ of a government, but are now well managed.

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