The challenges of private equity in 2025

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Below is a transcript of this programme on unlisted investment:

Private equity: a popular investment for individuals

Private equity in particular, and non-listed investments in general, are increasingly being chosen by private investors and wealth management professionals.

If private equity is so popular with individuals, it is because it allows them to seek returns with a long-term investment objective, but it raises a number of questions, particularly in terms of education or simply the use of experts on the subject.

Some trend indicators for 2025

Every six months, France Invest publishes a study on the state of private equity during the previous six months. The latest figures show that, generally speaking, fund-raising has been more complicated, as has investing the money and then crystallising the value by selling the companies has ‘seized up’ a bit.

Private Corner's analysis, as we are used to selecting and discussing with a huge number of funds and seeing the heterogeneity that can exist between one management team and another, is that for several months now, the current economic and political situation has tended to accentuate this heterogeneity and the differences that can exist between one team and another.

While the situation may seem rather anxiety-provoking, we've observed with the teams we work with that even if the situation is more complicated than it may have been in the past, they continue to raise funds, which is going well for those we work with. They invested at a fairly sustained rate in the first half of 2024, and they also implemented consolidation strategies for the companies in their portfolios.

They have also managed to dispose of some of them. Hence the need for wealth management advisers, family offices and private banks to rely on unlisted investment platforms such as Private Corner and others to provide granular analysis and access to finely analysed data so that they can select strategies with the most balanced risk-return profile for their end clients.

Discover our Private Equity offer for 2025.

According to Marc Lefevre, if we look at venture capital and analyse growth and venture, what we can also see is that tickets for large deals have fallen sharply. In other words, deals raising more than €100 million represent less than 40% of the market, which is not a good indicator.

On the other hand, in terms of the number of deals, there has been growth, but the drop in large deals means that overall, at least in pure venture capital, we are down by around 12% (EY figures for the 3rd quarter of 2024).

France in particular is holding up well, as we are still second in Europe, behind the UK. It's interesting to have a pan-European vision. The UK accounts for €11 billion of funds raised in non-listed companies, France for €5.7 billion and Germany for €5.6 billion.

As for the valuations of companies on purchase and resale, they vary from last year: we were after 12 times EBITDA, now we're down to 10, even if it's rising slightly.

The democratisation of unlisted assets

[Today we're talking about a real ‘democratisation’ of investment in unlisted assets]https://private-corner.eu/en/newsroom/q-and-a/are-french-savers-ready-to-invest-in-unlisted-companies). The role of investment platforms like Private Corner or Place des Investisseurs is to put individuals at the heart of financing the economy and transforming the world. When we talk about financing the economy, we naturally think of public equity, i.e. shares, but there is also private equity.

And private equity will be increasingly popular by 2025, thanks in particular to the Pacte Act, which was the first positive step. The second is the Green Industry Act. So we can have private equity automatically or voluntarily in our life insurance policies.

What opportunities?

The entry ticket for investing in non-listed companies is fairly high and diversified, since today it is generally €100,000, although some platforms lower it to €10,000, or even €500 with the new fund from BPI, the public investment bank.

According to Marc Lefevre, if we want to democratise this asset class, we're going to have to lower the entry ticket levels, because private equity is currently reserved for sophisticated investors. It accounts for less than 0.1% of French people's wealth, compared with nearly a quarter in the United States, where there has been phenomenal growth. Schwarzman, the boss of Blackstone, pointed out at an IPE, which has been the private equity fair for years, that this industry could only grow with B2C.

According to Estelle Dolla, private investors are generally inundated with a huge amount of information about private equity and unlisted companies, so it's quite complicated to make the most of the situation and learn from it when you're on your own. The first thing to do is to enlist the help of a wealth or asset management professional to provide an expert, a professional who can act as a link between the private investor and the various options and strategies available to him as part of the diversification of his private assets. Depending on the investor's risk profile, his appetite for risk, his investment horizon and his personal, professional and family situation, there are a whole host of factors to bear in mind when advising his client. They will either opt for a fund that is accessible from €500 or €10,000, called up on the first day, or, on the other hand, they will be wealthy clients who are able to invest larger sums from €100,000.

A deep market

The non-listed investment market is still in its infancy in Europe and is not yet mature. Because there are so many options, the first thing to do is to seek the support of a professional, who will work together to provide you with the best advice and support at the outset, but above all over the long term, because this is an asset class where there is no market timing, as opposed to the listed market, and in which you need to invest on a regular basis in order to diversify your entry points, whatever the economic cycles.

Selectivity, diversification and support: the three pillars you need to bear in mind when investing in private equity.

Liquidity risk

Liquidity, even on a long-term investment, can be a question mark for investors. This will depend on the investor's risk profile. If you are an investor of €500 or more or a retail customer, the risk of illiquidity may pose a problem.

On the other hand, a wealth investor will be able to take a long-term view. Liquidity is not going to be an issue for them, and this will enable them to maximise their expected target return.

Unlisted investments are not for everyone. You have to bear in mind that if you compare the performance of retail products with that of more institutional funds, you are going to invest at the cost of a few performance points precisely to benefit from this liquidity.

This risk should be weighed against the fact that private equity in particular, and non-listed funds in general, represent the best-performing asset class in existence.

To conclude

According to Marc Lefevre, there are four major obstacles to the development of unlisted assets:

• Lack of knowledge among investor clients
• Lack of education
• An offering that has historically been aimed more at institutional investors.
• Transparency needs to be improved: until now, information on strategies has been fairly confidential, too confidential.

Cumbersome administration is no longer an obstacle thanks to private equity investment platforms.

And if we go back to the profiles of individual investors, there is a trilogy:

• Profitability
• security
• Availability.