The private equity market in France

The French private equity sector is made up of a wide variety of players, including financial institutions, independent fund managers and family offices. The sector is structured around different investment segments: innovation capital, which supports young, innovative companies; development capital, which supports the growth of mature companies; growth capital, aimed at accelerating the expansion of established companies; and the development of new companies. accelerate the expansion of established companies; and transfer capital, used for company buyouts, often in succession situations. The private equity market is largely dominated by financial institutions: banks, pension funds and sovereign wealth funds, which will account for 75% of private equity fundraising in 2023.

On a global scale, private equity continues to grow, with assets under management reaching new records. In France, independent players such as PAI Partners stand out for their sector expertise, targeting leading companies in the food, consumer goods and healthcare sectors. Meanwhile, groups like Meridiam focus on sustainable infrastructure, a strategic field with high added value. Nevertheless, some giants, such asArdian (€150 billion in assets under management) and Eurazeo (€35 billion), are adopting a geoneralist positioning, responding to the varied needs of investors while increasingly integrating ESG criteria into their investment strategies.

The recent cut in key interest rates on October 17, 2024 has breathed new life into the private equity market, after several years of caution. Indeed, after a marked slowdown since March 2022 due to rising interest rates, players in the sector are now benefiting from more favorable financing conditions. For example, in 2023, the value of leveraged buy-out (LBO) transactions gradually picked up, representing 23% of assets under management in the first half of the year, an improvement on the 2022 figures, although far from the 44% average observed between 2011 and 2021. This renewed activity is reflected in increasingly aggressive financing, with investors benefiting from enhanced leverage, particularly in attractive sectors such as healthcare and technology, where valuations remain solid despite economic uncertainty.

The secondary market, meanwhile, is experiencing sustained growth due to increased demand for liquidity. In 2021-2022, on average, 52% of transactions were secondary (shareholder selling a share to another investor), rising to 62% in 2023. This trend is fuelled by investors' need to diversify and rebalance their portfolios while enjoying attractive returns. Younger assets (three to five years old) are gaining in popularity, offering bargain-basement opportunities for investors seeking medium-term returns. Finally, ESG (environmental, social and governance) factors are becoming crucial for investors, who no longer see them simply as risk management tools, but as levers for value creation. Many funds are moving towards strict ESG indicators, integrating these criteria to meet expectations of transparency and sustainable commitment, now an essential aspect of private equity asset valuation.