Quick thread on Europe's "strategic autonomy" and how it relates to "industrial policy".

A year ago, a (French) private-equity fund wanted to cash out of its stake in Photonis, a mid-sized firm specialising in, among other things, night vision equipment.

So what, you say?

Photonis a year ago was going to be sold for €500m. A decent reward for the buyout fund that nursed it back to health after some rough years. It invested time and effort on behalf of its own investors.

Now Photonis is reportedly going to be sold to a French buyer - for €370m.

There are, of course, arguments for banning foreign takeovers of companies that make (among other things) gear which the military buy. But there is also a cost attached to that.

Investors won't endlessly put up with it.

I don't know that the PE fund's returns were. But if the suspicion is that you can't buy and sell companies because of political factors, capital to grow European companies will soon disappear.

You can also forget about French firms buying foreign rivals. That's not great news given half of all western European firms' revenues come from outside the region.

The main beneficiaries are the investors who get to snap up companies like Photonis not for €500m but for €370m. In this case an investment holding company whose shareholders include some of the most venerable members of the French business establishment. Alright for some.

The main losers are French entrepeneurs and companies whose value is decimated by politicians pursuing ill-defined "strategic" agendas.

It *can* be justified, of course, but you need to be aware of the costs - and the costs rarely come up.

END