Private equity: risk funds reserved for well-informed investors

Raising new money for young SMEs in exchange for a stake in their equity is what speculation is all about in the “unlisted” sector (also called “private equity”). This activity, long reserved for large capital stocks and investment banks, became available to individuals a few years ago with the creation of specialized funds known as “investment capital” such as FCPR (Risk Mutual Funds), FCPI (Private Investment Mutual Funds). innovation) and FIP (local investment funds).

Attention, despite the attractive results of these products over the past ten years, exceeding 10% per year on average, the risks arising in the short term are very high (many startups risk going bankrupt within 2-3 years). Reserved for experienced investors with an investment horizon of at least 8 or 10 years.

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Subscription

Internet brokers distribute these products through their life insurance policies. It is through specialized management companies such as Eiffel IG, 123 IM, NextStage or Inter Invest that you can invest in these funds (between 1000 euros). It can also be accessed through asset managers or internet brokers (Boursorama, Placement-direct, Altaprofits, Linxea, etc.) who distribute these products directly or, more often, through their life insurance policies, knowing that in In this latter case, the amount invested in unquoted securities is limited to 10% of the outstanding amount of the contract.

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Risk

You will reduce it with the help of FCPR, whose leadership is focused on small and medium enterprises in the growth phase. Unlike FCPI and FIP, which invest at least 60% in innovative or regional SMEs, FCPRs have some flexibility in governance: the law sets a quota of only 50% of unregistered companies of any type. Therefore, they are slightly less risky if you choose funds that are managed with development capital (SMEs in growth phase) rather than venture capital (SMEs in the inception phase) or working capital (SMEs in trouble). methods with more questionable results.

station too on deductible fees in relation to subscriptions (4 to 5% is allowed, except for passing life insurance and thus obtaining a discount or even eliminating this puncture), but also and above all in relation to management, which every year bite off the real performance FCPR: over 4% per year is too much!

Last tip: to put the odds in your favor, it’s best to diversify your bet by at least three funds.

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The best fund managers record capital gains of over 25% per year.

The performances published each year are based on 10 years of history. Capital

With a 10-year average return of 10.2% per annum, the non-listed sector largely outperforms all other asset classes: +8% for CAC 40, +5% for real estate, and +2% for life insurance in EUR… Careful, still the same most, because in detail a quarter of private equity funds are in the red for the period (-1.5% on average).

Therefore, we will only risk if we accept losses, sometimes large ones, and choose management companies with recognized skills, such as Inter Invest, Eiffel Investment Group or NextStage, whose last funds have reached maturity, have shown record capital growth of over 25%. in year.

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Restrictions

Reselling your shares before the scheduled redemption date can be very expensive in terms of penalties. Venture capital funds have a very specific life cycle. First, you can’t access it whenever you want: the subscription period is limited to one year (sometimes two). The foundation then closes before it is dissolved, which usually happens after about ten years. Profits (or losses) are then distributed to investors. Meanwhile, you should know that it is difficult to return the money (it can take years to find a buyer for its shares). And the operation can be expensive: up to 5% fines…

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Taxation

After 5 years of holding shares, profits are not subject to income tax. While the FCPI and FIP offer entry tax credits, this is not the case with the FCPR. But subject to holding shares for at least 5 years, profits are exempt from tax, bringing only 17.2% of social security contributions (deducted by the fund and paid directly to the tax authorities).

Mark : if the subscription is made through life insurance, the taxation of that investment applies.