French private equity funds raised 16.5 billion euros in 2017, a record, according to the annual study published Tuesday by France Invest
THE ECONOMY WORLD | • Updated | By Isabelle Chaperon
French private equity has never done so well. In 2017, the Alpha Private Equity, Checkers Capital collected 16.5 billion euros against 14.7 billion in 2016, according to the annual study published Tuesday, April 3, by France Invest (French Association of investors for the growth) and Grant Thornton .
In parallel, these funds invested 14.3 billion euros (against 12.4 billion euros in 2016) in 2 142 companies, of which 85% are French. What set three records: the first for the money collected, the second for the amounts invested and the third for the number of companies that used this capital.
This is obviously good news for these financiers, whose job is to take shares in the capital of companies to hope to resell them a few years later with a profit. This is especially good news for the French economy, argues Olivier Millet, President of France Invest. “The economic and social role of the unlisted is major. The more we entrust capital to start-ups, SMEs and ETI [midsize businesses] , the more these companies will grow , invest , create jobs and pay the taxesin France “ , insists the CEO of Eurazeo PME.
Since his appointment at the head of the France Invest financial lobby in June 2016, Millet has worked to demonstrate that private equity – a transmission belt between savings and unlisted companies – benefits the entire economy, and not just the purse of these professional shareholders.
A phenomenal runaway
On the savings side, the plebiscite is massive. Around the world , pension funds, insurers and private banks are dumping dump trucks into private equity bunkers. In 2017, 921 private equity funds – according to Anglo-Saxon terminology – collected $ 453 billion (369 billion euros), “the highest amount ever raised in a year,” according to the firm Preqin. Apollo alone announced in July 2017 that it hadraised $ 24.7 billion for its ninth Apollo Investment Fund, erasing record Blackstone and Goldman Sachs collections before the financial crisis .
“This phenomenal rush is due to the returns offered by private equity, which remain well above those of other investments , even if rates rise a little,” says Eric Meyer, CEO of RBC Capital Markets for France. When, in the past, the funds took up to two years to convince investors to give them capital, some only needed three months, like Checkers, which exceeded its initial target by collecting 1 , 1 billion euros in May 2017 despite a blitz.
The trend continues unabated in 2018. On March 12, Equistone announced that it had won a € 2.8 billion commitment from 56 large institutional investors in four months. As for PAI, he announced on March 29 that he voluntarily limited to 5 billion euros his last fund, while the “family offices”, sovereign funds and other insurers offered him 15 billion.
“Real industrial approaches”
While private equity has earned its credibility on the side of financial backers, its image is starting to change also on the corporate side. Forgotten the time when the funds considered newsworthy by piling on the debt piles company s then make hunting costs and reduce staffing.
From now on, the Eurazeo or Equistone are strong to help SMEs and ETI to internationalize, to accelerate their digital transformation or to buy their German competitor … “The funds develop real industrial approaches and are ready to mobilize important envelopes for invest in the growth of portfolio companies. They become more committed investors on long-term prospects , “ says Meyer.
And as these financiers are banking on companies and leaders with high potential, performance is at the rendezvous . According to the study published in December 2017 by France Invest and EY, the 2,989 companies supported by private equity between 2009 and 2016 recorded growth of their turnover 2.7 times higher than the French nominal gross domestic product. Over the same period, they created 302,073 jobs in France between 2009 and 2016, nearly 30% increase in net job creation, compared with + 1.9% for the entire market sector.
“For a long time private equity has been a tolerated asset class. It is now seen as useful for both the economy and savings given its excellent performance, “ says Millet. The government seems convinced. Bruno Le Maire, the Minister of the Economy and Finance , announced on March 29 several measures, in the framework of the Bill Pact (for the growth and the transformation of the companies