Photo: Pexels- FCPR: minimum 50 percent invested in unlisted companies
- Entry ticket from 1,000 euros for retail FCPR
- Capital gains exempt from income tax after 5 years (excluding social contributions)
- Holding horizon: 7 to 10 years on average
- Limited liquidity, capital loss risk
The FCPR is the mainstream entry vehicle into private equity. Before subscribing, it is essential to understand how it works, its taxation and its liquidity constraints.
How FCPR works
A FCPR invests at least 50 percent of its assets in unlisted securities. The target companies are usually French or European SMEs and mid-caps. The management company selects the companies, monitors them and organises the exit (industrial sale, listing, buyback).
Types of FCPR
| FCPR type | Target audience | Entry ticket |
|---|---|---|
| Retail FCPR | Individual savers | From 1,000 euros |
| Tax-efficient FCPR (FIP, FCPI) | Retail seeking tax reduction | 5,000 to 15,000 euros |
| Professional FCPR | Qualified investors | Above 100,000 euros |
FCPR taxation
FCPR benefit from a favourable tax regime under three cumulative conditions:
- Minimum holding period of 5 years
- Reinvestment of income in the fund
- Compliance with the investment quota in unlisted securities
Capital gains are then exempt from income tax. Social contributions of 17.2 percent still apply.
Risks to know
- Capital loss: no guarantee, companies can go bankrupt
- Liquidity: early exit rarely possible
- Random performance: net annualised return generally between 4 and 10 percent, but dispersion is high
- High fees: management fees of 2 to 4 percent per year on average
Investment strategies
For interested investors, several approaches coexist: geographical diversification, sector (tech, health, infrastructure), development stage (seed, growth, turnaround). To combine taxation and diversification, see our articles on FIP and FCPI and on the PER.