The conflict in Ukraine is having a devastating impact on the value of the Caisse de dépôt’s investment in the railway giant Alstom, which was already battered on the stock market long before the Russian invasion.
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Yesterday, the action of the French multinational listed in Paris rose, but the day before, the title had fallen by 14%, to its lowest since 2005.
Over one month, Alstom retreated 29%, worsening its decline that began several months ago on the stock markets.
The reason ? Although Alstom has little presence in Russia with 0.5% of its sales, it still owns 20% of the Russian railway giant Transmashholding (TMH) and supplies it with equipment.
Photo taken from the TMH website
Alstom also has sights on the markets of the former Soviet Union and might also lose a major contract in Ukraine, which puts investors off.
All of this, added to Alstom’s setbacks on the stock market since the merger with Bombardier Transportation, has meant that the Caisse has seen the value of its investment shrink like snow in the sun.
In January 2021, when the woolen sock of Quebecers became the main shareholder of Alstom, the value of its block of shares was $4.5 billion. But yesterday, this investment was only worth $1.7 billion, a drop of 62% and a loss on paper of $2.8 billion.
Despite this setback, the Caisse still believes in the future of the railway company over the next few years in a context of decarbonization of the transport sector.
“Our investment is driven by a long-term vision. We have a strong belief in the future of the sustainable mobility sector, which plays an essential role in the climate challenge,” said spokesperson Kate Monfette in a written statement sent to the Journal.
In 2015, the Caisse had flown to the rescue of Bombardier, very close to bankruptcy, by taking 30% of Bombardier Transport for an amount of $2 billion.
Then, when this subsidiary was sold to Alstom, the institution added $1 billion to the French company. At the closing of the transaction, the Caisse therefore held 17.4% of the company.
But since then, the title of Alstom has slowly but surely sank on the stock market, in particular because of difficulties in digesting Bombardier Transport.
Last summer, big boss Henri Poupart-Lafarge said he expected difficult months and detailed a plan to return to better profitability, but that won’t happen before 2025.
Alstom still owns the former Bombardier plant located in La Pocatière.
