Special report - Understanding the mechanisms of private equity

How Private Equity Works and Has Established Itself as a Strategic Asset Class for Financing Unlisted Companies.  

While European private equity funds raised nearly 120 billion euros in 2024, this asset class has demonstrated its ability to outperform traditional stock markets with an average internal rate of return (IRR) of 14.8% over 15 years, compared to 10.07% for listed indices, according to Pitchbook. In an economic environment seeking diversification, the private equity sector offers direct access to the growth of the real economy.  

The document details the steps involved in supporting companies, the mechanisms for aligning interests, and the strategic value of funds of funds in optimizing risk management.  

In particular, the document presents:

• The various investment segments: venture capital, growth equity, andLBO;  
• The role of funds of funds in risk pooling, geographic diversification, and access to top-quartile fund managers;  
• The sector's economic impact, with average annual revenue growth for supported SMEs estimated at 8.3% according to France Invest;  
• Mechanical drivers of performance, such as tight governance, "buy and build" strategies, and the incorporation of non-financial criteria (ESG).  

This report is intended for individual investors, wealth management advisors, and financial professionals who wish to master the fundamentals of the private equity market. This study provides an educational and fact-based overview of the key mechanisms for integrating private equity into a long-term wealth management strategy.

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