A leading industry


What is Private Equity?

Private equity enables entrepreneurs lacking the necessary funds to undertake promising projects. It directs a part of long-term savings towards the equity of industrial or service companies that are usually not publicly traded.

Private equity investors are long-term partners of these companies, with an average period of involvement exceeding five years. Private equity accelerates growth by combining capital with the expertise of growth management professionals.

 

An investor for each phase of a company's journey

 

How private equity funds work 

Private equity investments are in most cases made through funds under the direction of management companies.
They can also be channeled through investment companies. 
Funds bring together investors and managers through contracts (fund rules). Investors are committed for the duration of the fund’s life, which is usually ten years. The manager acts on behalf and for the benefit of the fund, which has no legal personality. Expenses are covered by asset management fees. 
Funds typically operate on a just-in-time basis and are considered “transparent”: they call committed capital as it is needed, particularly for investments in companies in the portfolio. Likewise, they redistribute proceeds from disposals, repayments, and revenue from investments to investors.

Who invests in private equity?

Private equity investors manage funds that are entrusted to them by institutional investors (banks, insurers, retirement funds, pension funds, etc.), funds of funds, retail investors as well as local governments, universities or industrial groups seeking to support the development of new growth niches.

A variety of vehicles to effectively steer savings into companies

France has created a number of investment vehicles for institutional and retail investors:

  • The FCPR (Fonds commun de placement à risque, or private equity investment vehicle) is the most commonly used legal form in France. FCPR managers are certified and regulated by the AMF. They typically raise funds from qualified investors (institutional investors and family offices).
  • The FCPI (Fonds commun de placement dans l’innovation, Innovation Funds) and FIP (Fonds d’investissement de proximité, Local Investment Funds) are FCPRs for retail investors. They were introduced as a means to steering individual savings into innovative and regional SMEs in exchange for advantages in terms of income taxes. These funds have specific characteristics, reflecting the type of subscriber they are designed for.
  • The société de libre partenariat (SLP) is a major legal innovation, through which France has adopted the international standard of the Anglo-Saxon legal system’s Limited Partnership, thus meeting the international benchmark in the area of contractual relations between institutional investors and private equity fund managers (LPs and GPs).