Private equity, or capital investment, involves investing directly in companies that are not listed on the stock exchange. Unlike publicly traded shares that can be bought and sold in seconds on financial markets, private equity means taking stakes in companies inaccessible to the general public: early-stage start-ups, fast-growing SMEs, or mature companies subject to leveraged buyouts. This asset class, long reserved for institutional investors and family offices with minimum tickets exceeding 100 000 euros, has become considerably more accessible in recent years, thanks in particular to the PACTE law of 2019 and the development of investment vehicles designed for life insurance.
With a historical net IRR of 12.2% per year over 15 years according to France Invest (data as of end 2023), private equity outperforms all major traditional asset classes. But this exceptional performance comes with specific constraints -- illiquidity, high fees, opaque valuations -- that are essential to understand before investing.
The different forms of private equity available in life insurance
Venture capital (capital-risque)
Venture capital finances companies in their start-up or seed phase. It is the riskiest but potentially most rewarding segment of private equity. The companies financed are often technology or innovative start-ups that have not yet reached profitability and whose business model remains unproven. Historical venture capital returns regularly exceed 15% per year for the best funds (top quartile), but the dispersion is extreme: bottom-quartile funds show negative performance. The failure rate of financed companies remains high, around 60 to 70% of holdings, with spectacular successes compensating for multiple failures.
In life insurance, exposure to venture capital is generally indirect, through fund-of-funds that diversify risk across many holdings and several vintages.
Growth equity (capital-developpement)
This segment finances already-profitable companies looking to accelerate their growth: geographic expansion, acquiring competitors, developing new product lines, digitalisation. The risk is more moderate than venture capital because the company has already demonstrated the viability of its business model. Target returns sit between 10 and 15% per year for good funds. This is a particularly dynamic segment in France, with asset management firms like Eurazeo, Tikehau Capital and NextStage investing in fast-growing SMEs and mid-caps.
LBO (Leveraged Buyout)
An LBO involves acquiring a mature company using significant leverage (debt representing 50 to 70% of the acquisition price). The debt is repaid from the cash flow generated by the acquired company. The buyer commits only a fraction of the price in equity, which multiplies the return in case of success. This is the most represented segment in FCPR funds accessible through life insurance, with historical net returns of 8 to 12% per year. LBO funds from Ardian, Eurazeo and PAI Partners are among the most accessible through life insurance.
Private debt
Private debt involves lending directly to unlisted companies, outside the traditional banking system. The return is more moderate (5 to 8% per year) but the risk is lower than equity private equity, since the lender benefits from repayment priority in the event of company default. Tikehau Capital is a major player in private debt in France with its Tikehau Financement Entreprises fund, available through several life insurance contracts.
Historical performance of private equity in France
According to data from France Invest and EY (2023 review), French private equity delivered a net IRR of 12.2% per year over 15 years, significantly outperforming the main asset classes: French listed equities (8.9%), listed real estate (6.3%), sovereign bonds (2.1%). Over 10 years, the net IRR reached 14.8%. These returns include management fees and carried interest for managers, but not the life insurance contract fees which are additional for the saver.
FCPR funds eligible for life insurance
Fonds Communs de Placement a Risques (FCPR) are the main vehicle for accessing private equity through life insurance. Since the PACTE law, insurers are required to offer at least one private equity unit-linked fund in their multi-support contracts.
Main FCPR funds available in life insurance in 2026
| Fund | Asset manager | Strategy | Net target return |
|---|---|---|---|
| Eurazeo Private Value Europe 4 | Eurazeo | Diversified (LBO / Growth) | 8-10 % |
| Ardian Multi Strategies | Ardian | LBO / Growth equity | 7-9 % |
| Nextstage Croissance | NextStage AM | French SMEs (growth) | 8-12 % |
| Tikehau Financement Entreprises | Tikehau Capital | Private debt | 5-7 % |
| Altaroc Global 2024 | Altaroc | Global PE fund-of-funds | 10-12 % |
| Isatis Capital Vie & Retraite | Isatis Capital | French SMEs | 7-10 % |
Subscription conditions and liquidity
FCPR funds eligible for life insurance are called "evergreen" or have liquidity windows. Unlike traditional closed FCPR funds locked for 8 to 10 years, these funds offer quarterly or semi-annual redemption windows, making private equity compatible with life insurance redemption constraints. However, liquidity remains structurally limited compared to listed funds:
- Redemption delays: 1 to 6 months between the request and actual execution
- Redemption caps (gates): some funds limit redemptions to 5% of net assets per quarter. In the event of massive requests, redemptions are served pro rata
- Potential discount: in stress situations, redemption may take place at a value below the last official valuation
- Infrequent valuation: FCPR funds are valued only quarterly, or even semi-annually, unlike ETFs valued continuously
Worked example: Xavier's strategy
Xavier, 55, a business angel and former industrial SME director in the Lyon region, knows the unlisted company world well. He has 220 000 euros in his Linxea Spirit 2 life insurance and wants to integrate a private equity allocation to diversify his portfolio and boost his long-term return. His investment horizon is 12 years (retirement at 67).
Xavier restructures his contract as follows:
- 35% Spirica euro fund (77 000 euros) -- estimated return: 3.5%
- 25% Amundi MSCI World ETF (55 000 euros) -- estimated return: 7%
- 15% SCPI Corum Origin (33 000 euros) -- estimated return: 5%
- 15% FCPR Eurazeo Private Value Europe 4 (33 000 euros) -- target return: 9%
- 10% FCPR Altaroc Global 2024 (22 000 euros) -- target return: 11%
Estimated overall allocation return: 6.3% per year. Without the PE allocation (25% of the portfolio), the return would be 5.2%, i.e. 1.1 points less. Over 12 years, this difference represents approximately 42 000 euros of additional capital (before tax). Xavier accepts the illiquidity risk on this allocation because he will not need these funds before retirement and has a 40 000 euro emergency fund in savings accounts.
Advantages of private equity in life insurance
Diversification uncorrelated to listed markets
Private equity has a low correlation with listed stock markets, since unlisted company valuations do not fluctuate with daily market sentiment. In 2022, while the MSCI World fell by 13% and European bonds by 15%, private equity funds posted returns between +2% and +8%, fully playing their diversification role. By integrating 10 to 20% of private equity into a life insurance contract, the saver improves the overall risk/return profile of their allocation.
Superior long-term returns
As mentioned, the net IRR of 12.2% per year over 15 years places private equity at the top of all asset classes accessible through life insurance. This outperformance is explained by several factors: the illiquidity premium (compensating for not being able to sell easily), the leverage effect in LBOs, the operational expertise provided to companies by the funds, and access to investment opportunities not available on listed markets.
Considerable tax advantage through life insurance
By holding private equity in a life insurance wrapper, capital gains benefit from the contract's favourable tax treatment: a flat rate of 7.5% (after an allowance of 4 600 euros for a single person, 9 200 euros for a couple) beyond 8 years of holding, compared to 30% flat tax (12.8% income tax + 17.2% social contributions) in a standard brokerage account. On a gain of 50 000 euros, the tax saving can reach 8 000 to 10 000 euros.
Democratised access thanks to the PACTE law
The 2019 PACTE law truly transformed access to private equity for individual savers by requiring insurers to list at least one private equity unit-linked fund in each contract. Minimum investment thresholds have come down to 1 000 euros, compared to 100 000 euros minimum for institutional funds. Since 2019, private equity inflows through life insurance have multiplied by five, rising from 800 million euros in 2019 to over 4 billion euros in 2024.
Risks you must understand before investing
Structural illiquidity
This is the main risk and the most misunderstood by savers. Unlike an ETF or standard UCITS fund, you cannot recover your investment at any time. Liquidity windows are limited and spaced out, the insurer can suspend redemptions in the event of massive requests (gate clause), and actual reimbursement delays can reach 3 to 6 months. It is essential to invest in private equity only funds you will not need for at least 5 to 8 years.
Risk of capital loss
Private equity invests in unlisted companies whose valuation is uncertain and relies on valuation models (earnings multiples, DCF) rather than an observable market price. Some funds may show significant losses, particularly those invested in venture capital. Capital is in no way guaranteed, and losses can be total on individual portfolio lines. Only diversification within the fund mitigates this risk.
Watch out for cumulative fees
FCPR fees are significantly higher than those of standard listed funds. The typical fee structure includes: annual management fees of 1.5 to 2.5%, a performance commission (carried interest) of 15 to 20% of gains beyond a hurdle rate (generally 8%), plus life insurance contract fees of 0.5 to 0.75%. In total, cumulative fees can reach 3 to 4% per year in the absence of outperformance, and much more if the fund performs beyond the hurdle rate. These high fees are justified by the intensive operational work of private equity teams, but they significantly erode the net performance for the end saver.
Opaque and infrequent valuation
FCPR funds are valued only quarterly, or even semi-annually. You therefore only know the exact value of your investment at spaced intervals, which can generate surprises -- up or down -- at each publication. Furthermore, valuations rely on value estimates established by the manager himself, with validation by an auditor, which raises questions about potential conflicts of interest.
Vintage risk
Private equity fund performance is strongly influenced by the timing of investments. A fund that invests at high valuations (market peak) will mechanically have a lower return than a fund that invests after a correction. This timing risk is mitigated by evergreen funds that invest continuously, but it remains a significant factor.
The PACTE law and the democratisation of private equity
The 2019 PACTE law marked a major turning point for access to private equity through life insurance. Its main measures include:
- Listing obligation: insurers must offer at least one private equity unit-linked fund in each multi-support contract, alongside ISR and solidarity-based funds
- Relaxed investment rules: life insurance contracts can now invest up to 50% of their assets in unlisted assets (compared to 10% previously), although in practice allocations remain well below this ceiling
- Creation of evergreen funds: new FCPR formats offering greater liquidity were authorised, making private equity compatible with life insurance redemption constraints
- Strengthened oversight: pre-contractual information must clearly detail the specific risks of private equity, notably illiquidity and risk of capital loss
Who is private equity in life insurance suitable for?
Private equity in life insurance is suitable for savers who meet all of these criteria:
- Long investment horizon: at least 5 years, ideally 8 to 10 years. The horizon must be sufficient to go through a full fund investment cycle
- Confirmed risk tolerance: ability to accept a potential loss of 20 to 30% of invested capital on this allocation, without impacting their standard of living
- Emergency savings in place: never invest in private equity without also having 3 to 6 months of expenses in immediately available savings accounts
- Measured allocation: limit the private equity allocation to 10-20% of the total life insurance portfolio, with the remainder invested in liquid assets (euro funds, ETFs, UCITS)
Private equity is not suitable for savers with a short horizon, a need for liquidity at all times, or low tolerance for valuation uncertainties. It is a diversification investment, not a core portfolio holding.
Practical tips for investing in private equity through life insurance
Diversify across several FCPR funds to limit the risk specific to one fund, one strategy or one vintage. Ideally, spread your PE allocation across at least two funds with different styles (one LBO and one growth, or one France-focused and one international fund).
Favour fund-of-funds if you are starting out. Altaroc, for example, offers fund-of-funds invested in the world's best private equity funds (KKR, General Atlantic, Thoma Bravo). This approach provides immediate diversification across several managers, strategies and vintages, considerably reducing specific risk.
Check the liquidity conditions before subscribing: redemption windows, notice periods, redemption caps per period. These conditions vary significantly from one fund to another and can have a major impact in the event of an unexpected liquidity need.
Integrate private equity into a coherent overall allocation, alongside the euro fund (security), ETFs (performance and liquidity) and possibly SCPI (regular income). PE plays the role of long-term performance driver in a balanced allocation.
Do not give in to the hype. Private equity is a long-term investment that should be assessed over 5 to 10 years, not a speculative product. Past performance has been exceptional, but future returns could be more moderate due to rising entry valuations and increased competition between funds.
Conclusion: a powerful asset class to handle with discernment
Private equity in life insurance represents a remarkable opportunity for diversification and performance for savers with a long horizon and sufficient risk tolerance. The PACTE law has made this asset class accessible to the many, with reasonable minimum investments and vehicles adapted to life insurance constraints. However, structural illiquidity, high fees and the relative opacity of valuations call for a measured and informed approach. Integrate PE as a diversification allocation of 10 to 20% of your contract, diversify across several funds, and make sure you will not need these sums for at least 5 to 8 years.
Disclaimer
The information presented in this article is provided for informational and educational purposes only. It does not constitute personalised investment advice in any way. Past performance is not indicative of future results. Any investment in private equity carries a risk of capital loss and illiquidity risk. Before making any investment decision, we recommend consulting a qualified wealth management advisor.