When France’s newly elected president Emmanuel Macron swooped into office in June, he did so on a ticket of change. He vowed to reform some the nation’s stringent labour laws and create a business and investment environment in which entrepreneurs and startups could thrive.
Macron ran his campaign not dissimilar to a tech startup; his party, En Marche!, was only founded last April yet took the former investment banker to the presidency. His pro-business policy proposals include tackling the chronically high unemployment rate, which has been stuck above 7% for the past 30 years.
While some of his policies are likely to kick-start certain areas of the economy, Macron’s influence should not be overstated. True, some of the proposed reforms have the potential to unlock parts of the stagnant economy, but growth in the private markets was afoot long before he started campaigning.
In the first edition of our Country Focus series, we look at France's VC, PE and M&A markets and provide a snapshot of noteworthy dealmaking trends, firms and players.
France's VC scene is on fire (in a good way).
And unlike say Germany, which has notable tech hubs in Hamburg, Berlin and Munich, most activity in France is focused on Paris, which has seen the second-most VC deals of any European capital for the past three years. On top of this, Parisian deals will no doubt be further concentrated once startup hub Station F takes off.
VC activity in Paris
France is home to a plethora of venture capital firms, and here we profile three of the most active investors over the past couple of years, per PitchBook Platform. We excluded Bpifrance, which topped the list, because it is partly state-backed.
Year founded: 2010
Recent investments: Soundcharts, Feed., Railsbank
Kima was founded by Xavier Niel, a serial entrepreneur and the man behind Station F. He was an early Macron backer and has a reported personal fortune of around $9.8 billion.
The company claims to be the most active angel investor in the world, backing two startups every week. It was an early backer of TransferWise, the payments company that has garnered headlines recently due to a possible IVP investment that could value the business at as much as $1.5 billion.
Year founded: 1997
Recent investments: MycoTechnology, Machtfit, Anaeropharma Science
Led by Isabelle de Cremoux, Seventure is a subsidiary of Natixis Global Asset Management. The firm focuses predominantly on investments in digital technologies startups in France and Germany as well as life sciences startups across Europe and North America.
So far this year, the firm has participated in more than €100 million worth of venture financings, including the €3.5 million for in-shower micro-nebulization device maker Skinjay, as well as supporting Push Doctor’s $26.1 million Series B.
Year founded: 1982
Main offices: Paris (HQ), San Francisco, Berlin
Recent investments: Le Collectionist, SendinBlue, ManoMano
Partech has been busy this year. The VC investor has announced or completed six exits so far, per the PitchBook Platform, already set to surpass 2016 (four exits) and 2015 (five).
In July, the business led by Jean-Marc Patouillaud and Philippe Collombel closed its latest fund on a €400 million hard cap. The firm will use the vehicle, Partech International Ventures VII, to make Series A and Series B investments in early-stage tech companies in both Europe and the US.
A look at the buyout landscape underscores the point made earlier—that change was already underway before Macron won the election. In fact, besides the US and UK, France has seen more PE activity since 2010 than any of its continental European neighbors (about 60% more deals than its closest competitor, Germany).
Here we profile three of the country's top private equity investors:
Year founded: 1996
Notable offices: Paris (HQ), London, Frankfurt, Milan, Madrid, Zurich, New York
Recent deals: Stermed, Racetools, imes-icore
With Ardian, the capital is home to Europe’s most active PE investor. Led by industry veteran Dominique Senequier, the spin-out of the French insurance powerhouse AXA has completed more investments than any of its European peers over the last decade.
True, activity does not necessarily equate to stellar performance, but some of the buyout firm's past investments—such as the IRCA exit earlier this year—appear to validate the company's multi-strategy approach.
Year founded: 1704 (investing since 1977)
Notable offices: Paris (HQ), London, Luxembourg, Amsterdam, New York
Recent deals: Alert Protective Services, BASF Leather Chemicals, TR Alucap
Wendel was originally founded as an industrial company more than 300 years ago. Following the nationalisation of the group’s steel production activities by the French government in the 1970s, it turned to investing and is one of the earliest members of the country’s buyout scene.
Chaired by founding family member François de Wendel, its industrial heritage is in part reflected in its capital allocation, which includes previous investments in companies such as Saint-Gobain and Capgemini.
Year founded: 1977
Notable offices: Paris (HQ), Madrid, Milan, Munich
Recent deals: Apside, La Buvette, European Homes Group
Similar to Wendel, Siparex counts as one of France’s long-established buyout houses. The company invests in mid-market and intermediate-sized companies and claims to have completed more than 1,000 deals since its inception.
The firm has roughly €1.6 billion in assets under management and is currently led by Bertrand Rambaud, formerly of PwC France, who acts as CEO and president.
Mergers & Acquisitions
Nicolas Sarkozy, the former French president, bolstered the existing policy of protecting and creating "national champions" when he was in office from 2007 to 2012. There were notable successes. France is home to a world-class aerospace & defense industry and has one of the industrialized world’s best development of high-speed rail industries and networks. It can also claim a leading position in nuclear energy, thanks to companies such as Areva.
However, the national champions policy also reinforced the international perception of the nation’s protectionist instincts and economic patriotism. This could also be in effect when looking at M&A activity in the country, which—in line with an ongoing global trend—is seeing a decline in deal count:
Overall, Macron is facing several headwinds over the next coming months. In order to push through his labour market reforms, he will have to go head-to-head with the country’s unions—a battle all of his predecessors lost previously.
But this should not distract from what is already happening in the French private markets, where entrepreneurs are flourishing, and both VC and PE investors are making the most of the current buoyant investment environment.
Check out on previous France-focused featured content.
Article by PitchBook