FCPR: All you need to know about this private equity fund

The FCPR, or Fonds Commun de Placement à Risque, is a category of investment fund specialized in financing unlisted companies. This type of fund is at the heart of private equity, enabling investors to directly support the development of innovative SMEs and start-ups. The FCPR is a classic example of a private equity fund, offering an alternative to listed markets, with attractive potential returns, but also a risk profile suited to a long-term strategy.

FCPRs belong to the large family of private equity funds. Its main objective is to invest in unlisted companies, often SMEs in their growth phase or innovative start-ups, by providing capital to finance their development. This category of investment fund meets an essential need: to provide companies with stable, long-term financing, often difficult to obtain through traditional banking channels. In return, investors accept a higher level of risk than on listed markets.

This type of fund is governed by French regulations and often benefits from tax incentives, making it a preferred solution for investors wishing to diversify their portfolios while supporting the real economy.

FCPRs operate by raising capital from private or institutional investors, which is then invested in a diversified portfolio of unlisted companies. The capital raised is generally invested over several years in high-potential companies that need financing to accelerate their development, launch a new product or conquer new markets.

The main advantages of FCPR are as follows:

• Risk diversification: the fund invests in several companies, reducing the impact of a single company's failure.
• High-return potential: investment in unlisted companies often offers the prospect of significant capital gains, particularly when the companies are successful in their development or are sold at a higher price.
• Tax benefits: under certain conditions, investors can benefit from an income tax reduction of up to 25% of the amount invested, as well as exemption from capital gains tax on exit, provided they hold their shares for a minimum period.
• Professional support : the funds are managed by expert private equity teams, capable of identifying the best opportunities and actively monitoring the companies in which they invest. This is particularly true of Eurazeo, whose experience and international network enable it to effectively support the growth of selected companies.

However, it's important to note that FCPRs also present constraints, particularly in terms of liquidity. Investments are generally locked in for a period of 5 to 10 years, which requires appropriate financial capacity and risk tolerance.

The FCPR is often compared to the FCPI (Fonds Commun de Placement dans l'Innovation), another category of investment fund focused on innovation.

The main difference between these two funds lies in the nature of the companies targeted:

• The FCPR can invest in a wide variety of unlisted companies, whether traditional SMEs, start-ups or companies in the development phase.
• The FCPI, on the other hand, is specifically dedicated to financing innovative companies, particularly in the technological, scientific or R&D sectors.

In terms of tax benefits, both funds offer tax reductions, but the conditions and investment sectors differ. FCPIs often benefit from more attractive tax treatment, in return for a generally higher risk associated with innovation. Understanding these differences is essential to choosing the fund best suited to your objectives and investor profile.

When choosing a private equity fund such as a FCPR, there are several key criteria to consider.

Investment strategy

Some funds focus on specific sectors, such as industry, healthcare or technology. Others focus on regional SMEs or companies with a strong social or environmental impact.

Management quality

The past performance, experience and reputation of the management company are key indicators. It is advisable to study the results of previous funds and the methods used to select companies.

Financial conditions

Management fees, subscription and exit conditions, capital lock-up periods and distribution of gains must be clearly understood.

Tax benefits

Check that you are eligible for the applicable tax arrangements and that they are in line with your personal situation, particularly in terms of income and inheritance tax.

Investment horizon and risk tolerance

As a FCPR is a medium- to long-term investment, it's important to make sure that it matches your financial objectives and your ability to lock in your capital.

To make an informed choice, it is often advisable to consult a wealth management advisor or financial expert.

Like all private equity investments, FCPRs entail risks that should be fully understood before making a commitment:

• Risk of capital loss: investing in unlisted companies entails a high risk of partial or total loss of the capital invested.
• Liquidity risk : capital is tied up for several years, with no possibility of immediate resale.
• Operational risk: the success of investments depends largely on the performance of the selected companies and their ability to grow.
• Market risk: economic, sectoral or regulatory developments may affect the valuation of companies in which the FCPR invests.

A good understanding of these risks and appropriate diversification are key to limiting their impact.

The FCPR represents an attractive opportunity to diversify your assets by supporting the real economy. It provides access to an investment universe less accessible via traditional markets, with attractive potential returns. However, this type of investment is aimed at well-informed investors who are prepared to tie up their capital over a long period and accept a certain level of risk. When well chosen, a FCPR can become an effective lever in an overall investment strategy, combining financial performance with economic commitment.