Clifford Chance

Following a commitment of transparency, the French FDI Authority publishes the second edition of its annual report analysing foreign investment trends and policy in France over the last 12 months

The French FDI Authority experienced bustling activity over the last few years pertaining to the screening of foreign investments in France. The French Authority therefore decided, in 2021, to issue annual reports of its activity, in addition to other tools - such as the French FDI guidelines - to ensure predictability of French FDI regulation.

“With the highest number of foreign investment decisions in France, 2022 is a record year. More than ever, France is attractive”. With this tweet, French President Macron had already announced, earlier in February the dynamism of international investments in France.

Trends

The French FDI Authority has, once again, been reviewing a particularly important number of cases in the context of foreign investment in France for the year 2022, comparable to its 2021 activity. Indeed, 325 cases relating to foreign investments were investigated by the French FDI Authority in 2022, compared to the 328 cases reviewed in 2021. 131 transactions were approved by the French FDI Authority in 2022 and 53% of them were subject to conditions to protect national interests - again stable compared to the 2021 ratio. The percentage of conditionally approved transactions remain high in comparison to other EU Member States.

The annual report focuses specifically on the investments made in the defense sector – as a reflection of the increased geo-political conflicts and current challenges, the French foreign investment regulation is facing.

The relevance of the activity of the control of foreign investments in companies relating to national defense is highlighted by key figures in the annual report: 42% of the investments controlled in 2022 were purely defence or a dual usage related activities and the percentage of transactions approved subject to conditions increased to 76% for the defense related cases.

Investors from all over the world…

In 2022, most of the controlled investments - 65.8% - were made by non-European ultimate controlling investors. The main countries of origin were the United Kingdom, the United States and Canada. Within the European Union, investments were mainly made by end-investors located in Germany, Luxembourg and Italy.
The balance is in favour of non-European ultimate controlling investors, compared to the 2021 ratio.

…From all fields

As to the fields of exercise of most of these investments, 47% of ultimate investors in 2022 were financial investors, 39% were industrial investors and 14% were individuals.

Last but not least: the lowered threshold of 10% for French listed targets

The French FDI Authority takes the opportunity in its annual report to confirm that the French FDI regulation framework had been once again reinforced. The lowered threshold of 10% for French listed targets which was until now temporary will be permanent, as it had been announced by the French Ministry of Economy earlier this year. The annual report mentions that the practical details of this announcement and change to the regulation will be specified at a later stage in the course of the year 2023.

There is definitively more to come on the French FDI front.