Sélectibail

News

31 July 2000

The French company that specialises in finance leases faces an uncertain future following a change in ownership and alterations to tax legislation

Sélectibail – formerly Sélectibanque – is a small French property company controlled by the ISM group. Currently, it is selling off property assets, running down its finance-leasing portfolio, and waiting for ISM to decide on its future.

Paris-based ISM controls several property-linked businesses. In addition to Sélectibail, ISM’s main real-estate linked subsidiaries are Bail Investissement and ICC. A consortium led by two US organisations – Banker’s Trust and GE Capital – bought ISM from the Suez group in 1998. Banker’s Trust was itself subsequently acquired by Germany’s Deutsche Bank.

“What happens to Sélectibail depends on what decisions Deutsche and GE take about ISM,” comments Benoît Faure-Jarrosson, an analyst with Paris stockbroker Wargny. “The intentions of the consortium that bought ISM have never been publicly expressed, but my feeling is the move was carried out in a short-term perspective.”

If this is the case, ISM’s shareholders are likely to wish to optimise the value of ISM subsidiaries as far and as quickly as possible, with a view to resale. “There could be further regrouping of companies controlled by ISM,” remarks Faure-Jarrosson. “It is less likely that Sélectibail would be included in such a move because of the poor quality of some of its finance-leasing assets.”

At the same time, consolidation is taking place among the companies falling under the Sélectibail aegis. In May, Sélectibanque took its 100% subsidiary Sélectibail fully onto its own balance sheet, and adopted the Sélectibail name. In the course of this year, two other subsidiaries – Sicomax and Primabail – will be merged into the new Sélectibail in the same way.

Sélectibail is listed on the Paris stock exchange. On 31 December 1999, ISM owned 47% of the equity (conferring 63% of the voting rights), PHRV owned 15% (10% of voting rights), and Exane owned 5% (3% of voting rights). The remaining 34% of the shares, representing 23% of voting rights, were in the hands of the public.

Property-linked finance leasing – no longer an attractive activity in France because of tax changes and diminishing margins – constitutes Sélectibail’s main activity. The company is not taking on new contracts, and is running down its finance-leasing portfolio to zero. For example, for Sélectibanque, the total sum outstanding on finance leases at the end of 1999 was €354m (FFr2,322m), compared with €533m (FFr3,496m) 12 months previously, with total extinction of the portfolio scheduled to take place in 2017.

At the same time Sélectibail is also selling off properties linked to non-performing finance leases and most of the properties held for its own account. In 1999, Sélectibanque sold off 46 property assets for a total of €21m (FFr138m), realising net capital gains of €5.5m (FFr36m).

Properties being kept include a hotel and several warehouses. As a result of these moves, the volume of activities has been reduced, but the performance of the remaining portfolio has been improved.

Consolidated results for Sélectibanque and subsidiaries

	ALIGN=”CENTER”>1999		ALIGN=”CENTER”>1998
	€m	FFrm	€m	FFrm
Finance Leasing revenues	201.9	1,324	236.8	1,553
Property revenues	31.6	207	32.3	212
Net group profit	23.7	155	1.6	10

Sélectibail
Tour Europlaza
20 avenue André Prothin
92927 Paris La D

The French company that specialises in finance leases faces an uncertain future following a change in ownership and alterations to tax legislation Sélectibail – formerly Sélectibanque – is a small French property company controlled by the ISM group. Currently, it is selling off property assets, running down its finance-leasing portfolio, and waiting for ISM to decide on its future. Paris-based ISM controls several property-linked businesses. In addition to Sélectibail, ISM’s main real-estate linked subsidiaries are Bail Investissement and ICC. A consortium led by two US organisations – Banker’s Trust and GE Capital – bought ISM from the Suez group in 1998. Banker’s Trust was itself subsequently acquired by Germany’s Deutsche Bank. “What happens to Sélectibail depends on what decisions Deutsche and GE take about ISM,” comments Benoît Faure-Jarrosson, an analyst with Paris stockbroker Wargny. “The intentions of the consortium that bought ISM have never been publicly expressed, but my feeling is the move was carried out in a short-term perspective.” If this is the case, ISM’s shareholders are likely to wish to optimise the value of ISM subsidiaries as far and as quickly as possible, with a view to resale. “There could be further regrouping of companies controlled by ISM,” remarks Faure-Jarrosson. “It is less likely that Sélectibail would be included in such a move because of the poor quality of some of its finance-leasing assets.” At the same time, consolidation is taking place among the companies falling under the Sélectibail aegis. In May, Sélectibanque took its 100% subsidiary Sélectibail fully onto its own balance sheet, and adopted the Sélectibail name. In the course of this year, two other subsidiaries – Sicomax and Primabail – will be merged into the new Sélectibail in the same way. Sélectibail is listed on the Paris stock exchange. On 31 December 1999, ISM owned 47% of the equity (conferring 63% of the voting rights), PHRV owned 15% (10% of voting rights), and Exane owned 5% (3% of voting rights). The remaining 34% of the shares, representing 23% of voting rights, were in the hands of the public. Property-linked finance leasing – no longer an attractive activity in France because of tax changes and diminishing margins – constitutes Sélectibail’s main activity. The company is not taking on new contracts, and is running down its finance-leasing portfolio to zero. For example, for Sélectibanque, the total sum outstanding on finance leases at the end of 1999 was €354m (FFr2,322m), compared with €533m (FFr3,496m) 12 months previously, with total extinction of the portfolio scheduled to take place in 2017. At the same time Sélectibail is also selling off properties linked to non-performing finance leases and most of the properties held for its own account. In 1999, Sélectibanque sold off 46 property assets for a total of €21m (FFr138m), realising net capital gains of €5.5m (FFr36m). Properties being kept include a hotel and several warehouses. As a result of these moves, the volume of activities has been reduced, but the performance of the remaining portfolio has been improved. Consolidated results for Sélectibanque and subsidiaries ALIGN=”CENTER”>1999 ALIGN=”CENTER”>1998 €m FFrm €m FFrm Finance Leasing revenues 201.9 1,324 236.8 1,553 Property revenues 31.6 207 32.3 212 Net group profit 23.7 155 1.6 10 Sélectibail Tour Europlaza 20 avenue André Prothin 92927 Paris La D