Unlisted companies, particularly SMEs, have always accounted for a large share of the French economy. Nevertheless, over the past several years, investment in these companies has seen remarkable growth. This trend has the potential to bolster economic growth and guide the digital and green transformation of French and European businesses.
To discuss these issues, Institut Montaigne and Sciences Po's School of Management and Innovation are holding a series of events on the future of investment in Europe. This article follows the third event, on investment in private equity, with Nicolas Dufourcq, CEO of Bpifrance; Alain Rauscher, CEO and co-founder of Antin Infrastructure Partners; Dominique Senequier, founder and president of Ardian; and Natacha Valla, economist and dean of the School of Management and Innovation at Sciences Po.
Unlisted investment in the broadest sense of the term has been growing rapidly over the past decades, both in France and abroad. Total alternative assets under management have more than doubled since 2010, reaching $10.7 trillion worldwide in 2020. In France, the economy is also able to absorb much larger volumes of capital than in the past. According to France Invest, investment in unlisted assets has grown from €10.7 billion in 2015 to €31 billion in 2020.
On the one hand, the private equity industry has evolved so that it now covers a range of different investment situations. On the other, entrepreneurs’ attitudes to outside investment are changing - although apprehensions regarding external capital remain one of the main factors limiting the growth of private equity in France. The post-war generation of entrepreneurs, with their strong attachment to family capital, has been replaced by a new generation that is much more willing to open up its capital to investment funds. This change in mentality is a major source of growth for private equity, in France as elsewhere, and should continue to be encouraged. This requires the development of an ecosystem that is able not only to accompany the emergence of French unicorns, but also to support a growing number of industrial and other SMEs, thereby stimulating job creation.
France’s shallow capital markets are a major obstacle
Nonetheless, compared to other types of financing, and bank financing in particular, the share of private equity is still limited in France. The absence of pension funds, as well as dependence on the more strictly regulated life insurance industry, severely limit the depth of French capital markets.
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