French Private Equity: Sector Trends and Opportunities in 2024–2025

# French Private Equity: Sector Trends and Opportunities in 2024–2025

€37.8 billion. That is the amount raised by French private equity funds in 2023 alone — making France the second-largest PE market in Europe, trailing only the United Kingdom. Against a backdrop of rising interest rates, compressed multiples, and global deal-flow contraction, the French PE ecosystem has demonstrated a structural resilience that is attracting renewed interest from both domestic and international limited partners (LPs). This article unpacks the macroeconomic context, the most active sectors, key deal dynamics, and the strategic implications for investors navigating the French market in 2024–2025.

The Macroeconomic Context: Resilience Under Pressure

The global private equity market contracted sharply in 2022–2023, with worldwide buyout volumes falling roughly 35% from their 2021 peak (Bain & Company, Global Private Equity Report 2024). France was not immune: total investment volumes dipped from a record €21.1 billion in 2022 to approximately €17.3 billion in 2023, according to France Invest. However, the fundraising side told a different story — inflows held remarkably steady, signaling sustained LP confidence in French GPs.

Several structural factors explain this resilience:

• A diversified industrial base: France's economy spans luxury goods, aerospace, agri-food, healthcare, and deeptech — sectors that are less cyclically correlated than pure financial or real estate plays.
• State co-investment infrastructure: Bpifrance, the public investment bank, deployed over €6 billion across PE-adjacent mandates in 2023, acting as an anchor LP and de-risking ticket for international investors.
• Favorable tax treatment: The French Pacte Dutreil framework and PEA-PME accounts create demand-side incentives for domestic retail and institutional investors to allocate to PE structures.
• A maturing mid-market: French SMEs (ETIs — Entreprises de Taille Intermédiaire) represent a deep reservoir of sub-€500M enterprise-value targets with limited auction competition relative to large-cap deals.

With the European Central Bank beginning its rate-cutting cycle in June 2024 and the cost of leveraged finance gradually normalizing, deal flow is expected to accelerate through late 2024 and 2025. Goldman Sachs Asset Management projects a 20–25% rebound in European PE deal volumes for full-year 2024.

Sector Breakdown: Where Capital Is Flowing

Not all sectors are created equal in the current environment. The French PE market is exhibiting strong thematic concentration, with five verticals accounting for over 65% of all deals by value.

1. Healthcare and Life Sciences Healthcare remains the #1 sector by number of transactions in French PE. In 2023, it accounted for 22% of all buyout investments (France Invest). The aging French population — 21% of citizens will be over 65 by 2030 (INSEE) — combined with chronic underfunding of public hospitals has created a structural opportunity in private healthcare consolidation.

Key deal examples include: - Eurazeo's acquisition of Groupe Ramsay Générale de Santé stakes, building on a platform that now operates 430+ healthcare facilities. - Bridgepoint's investment in SIACI Saint Honoré, a health insurance and employee benefits broker, later merged into Diot-Siaci, creating a €800M revenue group. - Specialty pharma roll-ups by mid-market funds like Andera Partners and IK Partners, targeting contract development and manufacturing organizations (CDMOs).

2. Business Services and Tech-Enabled Services Software and tech-enabled B2B services generated 19% of deal volume in 2023. France's Station F ecosystem — the world's largest startup campus — has created a pipeline of scale-up companies seeking growth equity rather than VC. Funds such as **Eurazeo Growth**, **Ardian Growth**, and **Partech** are bridging the gap between Series C and full buyout.

Notable: The French SaaS sector is forecast to grow at a 14.2% CAGR through 2027 (IDC France), driven by cloud migration in public administration and SME digitization subsidies under the France Relance program.

3. Industrials and Deep Tech France's industrial heritage — particularly in aerospace (Airbus, Safran supply chains), defense electronics, and precision manufacturing — is generating significant deal flow as larger primes seek to restructure their supplier ecosystems. **Tikehau Capital** and **Argos Wityu** have been particularly active in industrial carve-outs.

The defense sector deserves special mention: NATO spending commitments and France's own €413 billion military programming law (2024–2030) are accelerating private investment in dual-use technology companies. Funds with defense mandates reported 2–3× oversubscription in 2023–2024 fundraises.

4. Consumer and Luxury France's luxury sector — anchored by LVMH, Kering, and Hermès — creates a halo effect for mid-market brands seeking PE backing to scale internationally. Funds like **L Catterton** (backed by LVMH) and **Eurazeo Brands** focus on premium consumer brands with €50–500M revenue, targeting cross-border expansion into Asia and the Americas.

In 2023, French luxury and premium consumer PE deals averaged an EV/EBITDA multiple of 14–16×, well above the pan-European average of 11.2× (PitchBook, Q4 2023).

5. Energy Transition and Infrastructure Aligning with France's goal of carbon neutrality by 2050, energy transition PE has exploded. Funds dedicated to renewable energy, energy efficiency, and green hydrogen raised €4.2 billion in France in 2023 (Infralogics). **Infravia**, **Meridiam**, and **Omnes Capital** are among the most active players. The EU taxonomy and green taxonomy-aligned mandates from French institutional LPs (notably French insurance groups like AXA and Allianz France) are creating powerful demand-pull for ESG-compliant deals.

Deal Dynamics: Valuations, Leverage, and Exit Markets

### Valuation Correction and Opportunity Window The multiple compression of 2022–2023 has created what many GPs describe as a "vintage opportunity." Average buyout EV/EBITDA in France fell from 13.1× (2021) to 10.4× (2023), per Lincoln International. This 20%+ correction — without a corresponding deterioration in underlying earnings — means that funds deploying capital in 2024 are entering at more defensible valuations.

Leverage Markets Reopening French leveraged loan issuance collapsed from €28B (2021) to €11B (2022) before recovering to €18B in 2023 (Loan Market Association). With ECB rates declining and credit spreads tightening, senior leverage ratios are creeping back toward 4.5–5.0× EBITDA for quality assets, from a trough of 3.5–4.0×. Direct lending funds — particularly **Tikehau Credit**, **Ares Management France**, and **Idinvest** (now Eurazeo) — have filled the gap left by reluctant banks, now providing 40%+ of mid-market debt financing in France.

Exit Market: Secondary Buyouts Dominate With IPO windows largely closed (the Euronext Paris IPO pipeline fell 60% in 2022–2023), secondary buyouts (SBOs) accounted for 58% of French PE exits in 2023 (France Invest). Trade sales to strategic acquirers represented 31%, while public markets accounted for just 11%. This creates a recycling dynamic within the PE ecosystem and underscores the importance of GP-to-GP relationships in deal sourcing.

Strategic Implications for Investors

### For International LPs Allocating to French GPs - Currency and regulatory familiarity: French PE funds operate under the AMF (Autorité des Marchés Financiers) framework, one of the most rigorous in Europe, offering strong investor protections. - ESG alpha: French GPs have among the highest PRI signatory rates in Europe, with 78% of France Invest members reporting formal ESG due diligence processes — a growing prerequisite for European institutional mandates. - Differentiated access: Mid-market French GPs with regional networks (Lyon, Bordeaux, Nantes) source deals outside of competitive auction processes, generating return premiums of 200–400 basis points versus large-cap funds historically (Preqin, 2023).

For Corporate Strategics Considering Partial Exits The current environment favors structured minority transactions — a format French PE managers are uniquely experienced with (OBO — *Owner Buy-Out* — structures represent 34% of French deal count). Founders retain operational control while accessing growth capital and PE governance expertise, reducing the emotional barrier to first-time PE engagement.

For Family Offices and Sovereign Wealth Funds France's *Club Deal* infrastructure — pioneered by Bpifrance's networks — allows smaller tickets (€5–25M) alongside lead GPs, providing direct exposure without management fee drag. The 2024 AIFM II directive is also broadening access to semi-liquid PE vehicles for European HNWI investors, which could add €8–12B of incremental PE demand in France alone (Deloitte Private Markets Outlook).

Risks and Headwinds to Monitor

No bullish thesis is complete without acknowledging key risks:

• Political uncertainty: The snap legislative elections of June–July 2024 and the resulting hung parliament create regulatory uncertainty, particularly around wealth taxation and carried interest treatment — a critical LP and GP concern.
• Dry powder overhang: French PE funds hold an estimated €28B in uncalled capital (vintage 2020–2023), creating deployment pressure that could bid up asset prices as markets recover.
• Geopolitical supply chain disruption: Industrial PE in particular is exposed to US-China tensions affecting French companies with significant Asian revenue or supply chain dependencies.
• ESG regulatory compliance costs: SFDR Level 2 and CSRD reporting requirements are adding 15–25% to GP back-office compliance budgets, disproportionately affecting smaller managers.

Despite these headwinds, the structural case for French PE remains compelling. The combination of a deep target company pool, maturing GP talent, strong public co-investment infrastructure, and attractive entry valuations positions France as one of the highest-conviction PE markets in Europe for the 2024–2027 deployment window.

Conclusion

French private equity is navigating a pivotal transition — from the liquidity-fueled exuberance of 2020–2021 to a more disciplined, fundamentals-driven era. The funds that will generate top-quartile returns in the next vintage will be those with sector specialization in healthcare, deeptech, and energy transition; differentiated deal sourcing away from auction processes; and robust operational value-creation capabilities beyond financial engineering.

For international investors, France offers a rare combination: the scale of a €37.8B fundraising market with the return dynamics of a mid-market ecosystem. In an era of macro uncertainty, that is a combination worth examining very closely.

For tailored intelligence on specific French PE managers, sector deal flows, or LP due diligence frameworks, contact the InekIA research team.

— Équipe éditoriale InekIA