Paris Looks To Make Itself More Attractive To PE

Source: PitchBook, Andrew Woodman
Photo: Chris Karidis on Unsplash

France is taking steps to woo more private equity funds through a new law that would lower barriers to doing business in the country.

Under a new bill soon to be presented to the French government, PE funds would be able to invest in more listed companies. Reuters reported that the proposed legislation will also include a sweetener for financial firms making it less costly to fire highly paid traders.

Specifically, if the bill passes, funds will be able to invest in companies with a market cap of up to €500 million (about $544 million)—as opposed to the current maximum of €150 million. It’s a minor change that gives investors access to around 88 more companies. Nevertheless, it illustrates Paris’ ongoing desire to capitalize on the UK’s decision to leave the European Union by lure financial services, including the private equity industry, away from London.

Looking at the current state of the PE industry in Europe, the UK remains the largest market—even after Brexit. PitchBook’s 2023 Annual European PE Breakdown showed that the UK and Ireland led the way on dealmaking last year, accounting for 30.1% of deal value, with France and the Benelux region accounting for 22.7%. It’s a similar picture on the exit side, with around half of the top 10 biggest exits in 2023 coming out of the UK.

This could change over time, particularly when one considers that Paris is home to some of Europe’s largest PE firms, among them Tikehau, Ardian and Eurazeo. Reforms like those described above might make little difference in isolation, but they could contribute to closing the gap. All the while, the UK may be moving in the opposite direction.

There are concerns that the UK’s next government might offer a more frosty reception. A UK election will happen in the next 12 months and most credible sources point to a likely win for the Labour government. When it does, the expected incoming finance minister—Rachel Reeves—will likely have carried interest tax loopholes in her crosshairs.

Featured image by AlxeyPnferov/Getty Images

https://pitchbook.com/news/articles/paris-private-equity-market