French private equity market participants raised EUR14.7 billion in global commitments during 2016, up 51 per cent relative to 2015, according to a report from the Association Française des Investisseurs pour la Croissance (AFIC) and Grant Thornton.
These funds will be largely invested in French companies over the next five years.
Of the total raised, EUR4.1 billion came from just one Paris-based private equity firm, while 45 per cent came from abroad.
The share of foreign investors increased relative to the 10-year average. They accounted for 45 per cent of total fundraising in 2016 (compared with 37 per cent from 2006 to 2015). In 2016, foreign pension funds, funds of funds and sovereign funds represented a significant and rapidly growing share of the overall total. French banks and insurance companies made a notable return and posted sharp increases.
During 2016, French private equity firms invested EUR12.4 billion to support and accelerate the growth of companies engaged in growth projects. This marks the fourth consecutive year of growth, up 15 per cent relative to 2015. Some 54 per cent of these investments were made in new companies accepting new shareholders for the first time.
A record number of companies (1,893) chose to receive private equity financing from AFIC members, compared with an average of around 1,600 over the past 10 years. The number of companies receiving venture capital financing marked another record.
The stability of company locations remained unchanged, with 85 per cent of them based in France. Information and digital technology companies led the way in terms of the overall number, while industrial companies received the bulk of the investment amounts.
Some 1,376 companies prepared or completed changes in their ownership structure during 2016, a 14 per cent increase relative to 2015, which confirms and strengthens the liquidity of this asset class. The market for exits was sustained among strategic buyers and private equity firms.
Thierry Dartus, partner and head of the transaction advisory services department at Grant Thornton, notes: “The results of this annual survey confirmed the trends observed at the end of the first half of 2016, which showed a bump in activity across all private equity market segments. Fund-raising totals were significant, with a noteworthy return of certain financial institutions and an increase in the number of foreign investors. The number of companies receiving financing reached new highs, marked by a sharp increase in investments in the venture capital and buyout capital segments. With key upcoming elections marking the European environment, private equity firms have the necessary resources as we begin this year to support the financing of French companies for their growth and buyout projects.”
Olivier Millet, chairman of AFIC, says: “All of the indicators – total funds raised, the number of companies receiving financing, market liquidity through successfully completed exits – demonstrated an acceleration in the growth of French private equity in 2016. This excellent news shows that French and international investors foresee growth for French unlisted companies financed through private equity. It is also a positive sign of closer ties between entrepreneurs and private equity firms. In this year of Brexit and French elections, our industry has a five-year horizon during which it can redouble its efforts to help companies grow and strengthen them for global competition. AFIC’s 16 proposals published last January identify the measures at hand to continue the positive trend already begun.”