Is Private Equity a real opportunity for private clients?

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Private Corner was featured in the special edition of “Funds Magazine” dedicated to the crucial question:

Private Equity - A real opportunity for private clients?

Estelle Dolla, our President, spoke with Luc Maruenda of Eurazeo, Xavier LAURENT, CIIA of Federal Finance Gestion, and Stéphane RUDZINSKI of RHETORES FINANCE, exploring the advantages of private equity in a context where other assets also offer attractive returns.

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A few key points emerged from these discussions:

1. Attractiveness and Performance: Private equity stands out for its ability to transform companies and create long-term value, despite a volatile market.

2. New players and rigorous selection: The emergence of new players on the private equity market underlines the importance of expert selection to ensure quality investments.

3. Fundraising by institutional investors is slowing down, while the retail market is becoming increasingly attractive: As institutional investors re-evaluate their investments, private equity is increasingly attracting private clients interested in unlisted opportunities.

4. Weak exposure in France and the importance of financing the education sector: The under-representation of private equity among French private clients highlights the need for better financial training.

5. Impact of the Eltif 2.0 label: Eltif's redesign opens new doors, making private equity more accessible to a wider audience.

6. Quality of portfolios: As with Private Corner, private client offerings are of the same high quality as those for institutional investors, offering access to a diversified range of strategies and sectors.

7. Evolution towards targeted themes: The sector is evolving towards areas such as tech, healthcare and reindustrialization, reflecting current trends in society.

8. Building Private Equity Exposure: A diversified and structured approach is essential for an effective private equity portfolio, combining diverse strategies and geographies.

For a full immersion in these key perspectives, read the full article in Funds Magazine.

**Investing in unlisted companies involves risks of capital loss and liquidity.

Loi Pacte: the genesis of Private Corner

The PACTE law has played a decisive role in the development of private equity investment in France by relaxing certain rules and making this type of investment more accessible to a wider range of players:

Relaxing investment criteria for individual investors

The PACTE Act has broadened access to private equity for individual investors, notably by allowing popular savings, such as those from life insurance, to be invested to a greater extent in unlisted funds. As a result, savers can diversify their investments by accessing private equity funds, previously reserved for institutional investors, while benefiting from the tax advantages associated with life insurance.

PEA-PME expanded

The PEA-PME, a stock savings plan dedicated to SMEs and ETIs (mid-sized companies), has been strengthened by the PACTE law. It now makes it possible to invest in private equity funds, particularly in unlisted companies, while benefiting from advantageous tax treatment after 5 years of ownership. This measure has encouraged individuals to direct part of their savings towards financing growing companies via unlisted funds.

Development of French-style pension funds: PER funds

The PACTE Act introduced the Plan d'Epargne Retraite (PER), which enables savers to allocate part of their pension contributions to private equity investments. The PER thus offers greater flexibility in the management of retirement savings, and makes it possible to direct part of these funds into unlisted assets, indirectly stimulating the private equity market.

Creating a more favorable framework for ELTIF funds

The PACTE Act also supported the development of ELTIF funds (European Long-Term Investment Funds), designed to facilitate investment in unlisted European SMEs. These funds aim to channel long-term savings into high-impact projects, particularly in innovation, energy or industry, thereby contributing to the financing of the real economy via private equity.

Encouraging investment by institutional investors

The law also introduced measures to encourage institutional investors, such as pension funds and insurance companies, to increase their investment in private equity. By facilitating insurers' access to these assets, the PACTE Act has opened up new sources of financing for companies, thereby strengthening the private equity market.

Global impact

These measures have broadened the investor base in private equity, democratizing access to unlisted assets for individual investors and encouraging institutional investors to allocate more capital to this asset class. The result is an increased flow of capital to French companies, particularly SMEs and ETIs, strengthening their ability to finance growth, innovation and job creation.