Firms and products
Private equity investors do not form a uniform category. They can be:
- Insurance companies
- Pension funds (including US funds)
- Industrial groups investing via corporate ventures, which generally use special structures called corporate funds or independent structures called venture capital funds
- French government agencies, via Osea Anvar, which is in the business of financing innovation
- Private individuals, called “business angels”, who provide venture capital, or family members, friends and close acquaintances who supply “love money”.
These investors can invest:
- Directly in the target company, but this type of investment is usually reserved for qualified investors. In this case, the investment takes the form of a capital contribution made through share subscriptions or advances on partners’ current accounts, for example, or
- Through a private equity fund managed by an authorised management company. This solution delegates investment management to qualified professionals. In English-speaking countries, the standard model for these investment vehicles is a limited partnership. In France, the most common vehicles are venture capital funds and venture capital companies (see below). These vehicles can be listed on the stock exchange, if the regulations permit, or
- Through a fund of funds, i.e. a fund that selects the best specialised funds.
Firms and products
OPCIs offer investors many advantages stemming from the combination of characteristics inherited from both collective investment schemes and real estate investment:
- Professional portfolio management
- Risk sharing
- The stability of a real estate portfolio
OPCIs can take two legal forms: open-end real estate investment companies (SPPICAVs) and unincorporated real estate investment funds (FPIs).
One of the other shared characteristics is that they are not listed on the stock exchange, unlike SIICs. Therefore, they do not involve public offerings.
Open-end real estate investment companies (SPPICAVs)
The structure of these companies is inspired by that of open-end investment companies (SICAV). They are open-end joint stock companies that issue shares as investors demand them. The shares are sold and redeemed on the basis of the net asset value (plus or minus any fees or commissions). Investors holding shares in an SPPICAV are shareholders and are thus entitled to express their opinion about the management of the company at the shareholders’ meeting. The SPPICAV is managed by a management company that the AMF has specifically authorised to perform this function.
Some of the “real estate” quota of an SPPICAV’s assets can be made up of holdings in SIICs, unlike FPIs, where SIICs do not count towards the real estate quota. The quota of “unlisted” real estate assets must be at least 51% of the SPPICAV’s total assets. The introduction of listed securities provides greater liquidity and more flexibility in the financial management of the portfolio.
The portfolio of an SPPICAV breaks down as follows:
- At least 60% in real estate assets. Real estate assets owned directly or through unlisted real estate investment companies must make up 51% of the assets. The remainder of the 60% quota can be made up of listed real estate investment company shares.
- A cash reserve, accounting for at least 5% of their portfolio,
- The rest (35%) of the portfolio should be made up of financial assets (e.g. securities).
Basic tax treatment
A SPPICAV is required to distribute:
- At least 85% of the income available for distribution from rents and financial income,
- At least 50% of the net capital gains on asset sales made during the financial year or undistributed gains from previous financial years.
SPPICVAVs distribute securities income
Thus, SPPICVAVs distribute securities income to their shareholders.