French Private Equity Breakfast Report: after a record Q1 2022, the Private Equity market is seeing significant slowing in 2023
- Recent PE investment, M&A activity, trends in France
- High opportunity sectors and market segments
- Value creation – portfolio management and asset class strategies, turnaround and change management, succession planning, talent acquisition and retention
- Fund raising environment and outbound investment destinations
These were among the main discussion topics covered during the first French Private Equity Breakfast hosted by Pedersen & Partners and CMS Francis Lefebvre, on May 25, 2023.
Senior decision makers from Private Equity, mezzanine and venture funds, asset managers, financial institutions, advisory firms, family offices, and portfolio companies gathered in Paris to discuss industry trends and exchange opinions.
The panel was moderated by Alexandre Delhaye, Partner Corporate/M&A CMS Francis Lefebvre, and Alvaro Arias, Partner and Head of Private Equity Practice at Pedersen & Partners. Panel members included:
- Sophie Chateau – Partner, Head of Investor Relations, LBO France
- Dominique Gaillard – President, Armen
- François-Xavier Mauron – Partner, Andera MidCap
- Anne-Laurence Roucher – Deputy CEO, Head of Private Equity and Natural Capital, Mirova
- Philip Szlang – Managing Director, Head of M&A West, Mutares
- Séverine de Wulf – Managing Director, PAI Partners
The general conclusion is that despite a record year in 2022 which was mainly concentrated in the first quarter, the PE market is entering challenging times and a significant slowdown in 2023.
Alvaro Arias, Partner & Head of Private Equity Practice at Pedersen & Partners, summarised the key takeaways from the lively debate as follows:
- There is a definite trend of transitioning away from “risk and return” projects in favour of a “risk, return and impact” standpoint.
- An increasing difficulty in raising funds, especially for funds operating in the mid-market, is making less risk-averse investors such as family offices more attractive.
- A focus on internal operational performance (IT, sales effectiveness, Due Diligence processes) and on hiring for internal organisations to create value within portfolio.
- Increased consolidation and platformisation in the sector offer economies of scale, intimacy with clients, and development of new product lines.
- There are fewer exits leading to changes of CEOs at the portfolio level.
- ESG investments are boosted by new regulations.
- Impact Investments in emerging markets require robust skills, local expertise, and partnering with DFIs to mitigate risks.