updated 7/8/2005 9:45:03 AM ET 2005-07-08T13:45:03

Shares of Gaz de France soared Friday as the state-owned utility made its stock market debut, an encouraging sign for the French government as it prepares for the partial privatization of its larger power utility Electricite de France later this year.

The GDF offering, expected to raise up to $3 billion (2.5 billion euros) for the state and $2.4 billion (2 billion euros) for the utility, is the world’s largest IPO since 2002, according to U.S. research house Renaissance Capital.

The Finance Ministry said late Thursday the subscription price for GDF shares had been set at $27.98 (23.40 euros) for institutions and $27.74 (23.20 euros) for individual investors — near the top end of the price range published when the sell-off was announced last month.

The sell-off cuts the state’s holding in the gas utility to around 78 percent from 100 percent and has so far raised $2.2 billion (1.84 billion euros) for the government and $1.9 billion (1.6 billion euros) for the utility, the ministry said.

With a strong base in France, GDF ranks as the third-largest distributor of gas in western Europe behind E.On AG of Germany and Eni SpA of Italy.

Shares in GDF, which posted a 2004 net profit of $1.2 billion (1.0 billion euros) on revenue of $21.6 billion (18.1 billion euros), rose about 19 percent above the individual investors’ price to $33.06 (27.65 euros) in mid-afternoon trading Friday, valuing the company at around $32.2 billion (26.9 billion euros).

Also on Friday, the Finance Ministry announced the official publication of a decree giving the final go-ahead for a partial sell-off of the electric utility EDF after lawmakers voted in favor of the partial privatization last year.

Finance Minister Thierry Breton will press ahead with preparations for the EDF flotation, the ministry said, “and in particular the definition of conditions of the offer that will be reserved for employees.”

The GDF offer was seen as a market test for the government’s plans to privatize part of EDF despite strong opposition from power workers and their unions.

For its part, EDF hopes to raise as much as $12 billion (10 billion euros) through a massive share issue to help shore up its financial position.

The government has said that selling shares of the two former monopolies on the stock market would help them evolve into leading European energy companies at a time when French gas and power markets are gradually opening up to competition.

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