Private Equity in France
Private equity in France is another story, and yes, it’s a different story altogether. In this article, we will go into the nitty-gritty of the private equity market in France so that you can get an overview of what works and what doesn’t.
If you’re an aspirant, here’s how we will talk about private equity in France –
- Overview of Private Equity in France
- Private Equity Services Offered in France
- Top Private Equity firms in France
- Private Equity Recruitment in France
- Private Equity Culture in France
- Salaries in Private Equity in France
- Private Equity Exit Opportunities in France
If you are new to Private equity, then you may have a look at this detailed guide on what is Private Equity?
Overview of Private Equity in France
If you are an aspirant and would like to make a career in private equity in France, there’s good news. In 2016, France’s private equity firms raised over EUR 14.7 billion in total capital commitment. Compared to the total capital commitment in 2015, it is around a 51% increase. Rarely can we see such growth in total capital raised just within a year?
Out of EUR 14.7 billion, EUR 4.1 billion was raised by a Paris based private equity firm, and 45% of the entire capital commitment came from abroad. The foreign investment is important here, because during the last 10 years prior to 2016 (from 2006 to 2015), the foreign investment was only around 37%. In 2016, it increased to 45%. The increase in foreign investment funds was due to the notable returns made by the French banks and insurance companies.
The fascinating part of the private equity in France is the amount they invested in the companies involved in growth projects. It is a whopping EUR 12.4 billion in 2016 only. If we compare the amount with the amount invested in 2015, it would be around a sharp 15% increase. Out of these investments, 54% of the investments were done in new companies inviting new shareholders for the very first time.
What’s more surprising is the number of companies in France & elsewhere who decided to take assistance from private equity in France. The number is 1893. For the last 10 years prior to 2016, the basic average of companies who took the assistance of private equity firms is 1600. However, the percentage of French companies taking assistance from private equity remained similar, around 85% of the total numbers of private equity firms. And most of the investments are made in digital and information technology companies.
Around 1376, companies changed their ownership structure as well, which is around a 14% increase in comparison with the changes in 2015. This change in structure ultimately strengthens the liquidity of the asset class.
Private Equity Services Offered in France
Let’s have a glance at the three types of services private equity firms in France offer –
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- Development Capital: Private equity in France concentrates on companies that are high growth-oriented and are super innovative and technologically superior. As a result, the investment yields better growth for the company and generates better returns for the private equity firm.
- Emerging Economies: Emerging markets are the markets that can generate maximum growth and which need maximum attention. Private equity firms in France invest in emerging economies to assist in strategic advisory, financing, and portfolio construction. As a result, these private equity firms earn attractive returns and help a lot of companies in emerging economies.
- Real Assets: You would agree that France is a lot of art, culture, and community values. Maintaining a similar credo, private equity firms in France invest in sustainable assets that provide social and structural benefits to local communities. These assets generate a lot of revenue for a long period of time for private equity firms in France.
Top Private Equity firms in France
According to Preqin, here are the top 10 France based private equity fund managers on the basis of total capital raised in the last 10 years –
As you can see, Adrian, by taking the balanced strategy, could raise around EUR 29 billion in the last 10 years. The rest is just a meager amount compared to Adrian’s total capital commitment over the years.
You can target these funds when you would be applying for private equity jobs in France. Keep your eye for Adrian if you want to work in a top-notch private equity firm.
Also, look at the List of top 10 private equity firms.
Private Equity Recruitment in France
In France, the recruitment process is a bit different than the other countries in Europe. Let’s have a look at the step-by-step process –
- Eligibility/Pre-requisites: There are some prerequisites for breaking into private equity in France. The first thing you should do if you’re aspiring to enter the PE market is to enroll yourself in one of the top business schools there. It’s mandatory because otherwise, the road would be very bumpy for you. The second thing you need to consider is to earn a few years of experience in M&A or consulting in a top-notch bank or a boutique investment bank. Third, you better be from France to get selected for a junior role. You can be a foreign national and get an opportunity in France but at top-most/senior positions. Yes, exceptions can be there, but for that, you need to network a lot.
- Networking: France’s PE firms value your education a lot more than you think. Depending on which degree you completed, you will get compensated. If you’re from a top B-school, then your pay grade would be much higher. But if you’re from a so-so school, you will be compensated much less. And there lies the importance of networking. Of course, if you can enroll yourself in a top B-school, but if not, you need to network extensively. Your job would be to connect with your alumni network and then find out people who have been working in private equity and try to get an internship in PE. If your alumni network can’t help, try out Linked-In and find out people who can help you get an interview for an internship. An internship is important if you don’t have any consulting experience, and you aren’t even from a top-notch college.
- Internships: Networking is your only tool if you want to do internships. A couple of internships will definitely help. What’s killer is having a few years of experience in a consulting job and then having two internships in your arsenal? While doing these internships, make sure that you learn the secrets of the trade. But know that in France, it’s pretty difficult to turn your internship into a full-time role. So, you may look for options in other countries (both for internships and full-time jobs) and then can come back to France for progressing in your PE career.
- Interviews: Like any other country, you need to go through similar rounds of interviews. You will be going through 3 to 6 rounds of interview, and you will be asked questions on accounting, valuation, and the LBO model. The most noteworthy thing to mention here is that in France, PE firms concentrate on the process of every technical question than the result. For example, what sort of purchase price adjustments a buyer may make, how one can co-ordinate financing a deal with non-traditional lenders etc. And one more thing that is important is the know-how of that particular firms’ strategy. Before going for an interview, you need to thoroughly research the firm, its investment strategy, how many investment deals it has made, and the approach and focus of the firm. Knowing all of these will help you answer questions during the interview, and you would be able to stand out in the crowd. At the end of the interview, you also need to present a case analysis. In France’s private equity firm, they will ask you about the “2 slide analysis” of a company where you need to create a short presentation on whether you should invest in the company or not.
- Language & entry barriers: You must know French. But only French will not cut. You also need to know English. And you need to be proficient in both of these languages. To test the knowledge of English, many firms conduct 20% of interviews in English and the rest in French. There’s almost no entry barrier, but as a foreigner, you need to face a lot of competition with native people. As a result, it would be very hard for you to grab junior roles as a foreigner. The best option is to have a few years of experience elsewhere (in the UK or US) and then come back to France to have a senior position/s.
Do you have a look at this How to Get Into Private Equity?
Private Equity Culture in France
In France, the work-life balance is pretty important. And that’s why you will be working lesser than what you would do in PE firm in other countries. You may need to work 60+ hours. But if you’re on a live deal, you may need to work much harder.
Usually, you will be going home around 11 pm. in normal situations. But when you’re handling too many deals, or you need to create a report for the client’s requirement, you may need to extend the time.
Another thing that bothers the full-time employees in PE firms in France is that it’s very difficult to make progress. If you don’t get promoted in your career, how would you build up your career in private equity in France! Still, the most surprising thing is the attrition rate is pretty low in PE firms in France, and everyone loves to grind day in and day out.
Salaries in Private Equity in France
Compensation may be the thing for which people stick to their jobs and don’t seem to leave private equity in France at all. Let’s have a look at the graph created by statista.com, and then we will discuss the salary of private equity professional in France –
As you can see the chart, shows that as a junior employee, you will earn EUR 60,000 – 80,000per annum, which is not at all bad. If you have more experience, you will earn much more (i.e., around EUR 80,000 – 150,000 per annum on average. When you have 12+ years of experience, you will earn more than EUR 150,000 per annum.
Private Equity Exit Opportunities in France
It is strange to know that even after there’s little or no growth in private equity in France, people don’t seem to leave their job. For which there are two problems arise –
- First, as they don’t leave their job, newcomers don’t get an opportunity to enter the PE market.
- Second, the chances of growth of those full-time employees get stunted.
But, you still can look for exit opportunities if you think prudently. You can leave the job in France and can try your luck in the US or in the UK. If you can go to London, it would be difficult to stand out because there are many French people out there. But if you aim to work in the PE market in the US, you would be able to stand out in the crowd, and it would also be good for your career growth.
In a nutshell, Private equity in France is good for pursuing your PE career, but there are few issues you need to consider. First, you will not get the job easily because the attrition rate in the PE market is too low (no-one leaves the job easily). Second, there’s almost no progress for full-time employees. Third, educational background is a big decider for your compensation. So you need to get clear about your priorities and then take action accordingly.
This article has been a guide to Private Equity in France, their services offered, the recruitment process, their culture, top private equity firms in France, salaries, and exit opportunities. You may also have a look at the following article for learning more about Private Equity