Shares: investing in unregistered shares, instructions for use

The best investment of the last fifteen years? Look no further: it’s not real estate (+6.3% per year between 2007 and 2021), and it’s not the stock market (+5.1% per year for the CAC 40 index). And even less is the European life insurance fund, whose annual return is now about 1%. But it is really private equity, also known as investments in unlisted stocks, that wins with an average performance of +12.2% per year, according to the latest ranking by the France Invest association, published at the end of June.

It should be remembered that this is an investment that consists in supporting the long-term development of small, medium and medium-sized companies (SMEs and ETIs) by injecting new money into their capital. Or even accompany the executives of these same companies in their debt buyout (known as LBO) or their loans.

So many deals require several years in advance because the capital invested is often only recouped when a competitor or larger company steps up to buy the company, or when it eventually goes public. And which, therefore, in the meantime have the peculiarity of being very illiquid, the founding shareholders most often seek to lock up their capital, and the shares of such companies require expertise to set a price.

Therefore, it is not surprising that this type of investment has so far been the prerogative of professional investors such as the Eurazeo, Ardian and Siparex funds. Or family offices, those cells created by millionaires and billionaires to keep family legacies flourishing.

But as you will find out in this full file, the private one is now open to the general public. More and more insurers therefore provide, in particular, in their contracts sold on the Internet, a choice of FCPRs (funds of mutual investment risk) for subscription, which often require only €1,000 for bets.

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Crowdfunding platforms are developing into a new niche: after financing startup fundraising, they now allow unicorns to buy back employees who benefited from stock options during hiring, companies that have already exceeded one billion euros in value. Even public authorities are getting involved: Bpifrance thus launched the second issue of its public fund Bpifrance Entreprises, available from €3,000, but whose collection was exhausted at the beginning of July.

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While the Auvergne-Rhône-Alpes region offers, in partnership with Apicil and Groupama, the FCPR dedicated to SMEs in the region. This fund, called Préférence Région Auvergne-Rhône-Alpes, is available for life insurance from €6,000. It would be even more unfortunate not to be interested in this sector, as the taxation associated with it is attractive: tax exemption is granted, under certain conditions, to investors who hold their SME securities, such as shares in FCPR funds, for a minimum period of ten years Fees, which have long been a deterrent to this type of product, have also started to come down.

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From the summer of 2021, the subscription fee for unregistered shares under PEA and PEA-PME (SME Share Savings Plan) is effectively limited to 1.2% of the transaction amount, while the storage fee can no longer exceed 0.4% PEA value has increased by EUR 25 for a security that is not listed in the portfolio. Whereas before, such commissions could reach several hundred one-time euros!

Of course, one should not forget that this is a risky investment, since 90% of startups end in bankruptcy, including 10% in the first year. The sector is also in a state of complete overheat, with average gains recorded in 2021 reaching a record 32%, according to France Invest, suggesting that prices are now very high. Moreover, it will not be insensitive to the economic situation (a slowdown in the economy will also affect the activity and therefore the valuation of non-listed companies) nor to the current tightening of monetary policy (rate hikes are unfavorable for LBO companies ). ).

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“Due to this worsening environment, a correction should be expected,” confirms France Invest. Fundraising in the financial sector’s (fintech) startups is already slowing, and some of them have even had to lay off some of their staff. All the more so, to begin with, you should follow the recommendations of regulatory authorities and limit private listing to 10% of your assets.

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