Building a Centre of Capital Accumulation: A Study of the Institutional Emergence of the French Private Equity Sector (from the Early 1980s to 2017)

ABSTRACT

This article describes a major shift in French capitalism: the emergence and development of the new private equity sector. It discusses the particularities involved in the construction of this capital accumulation centre in France, studying how an advantageous institutional arrangement was coproduced by fund managers, government and traditional industrial managers. As such, it takes an institutional approach focusing on the history of the rules that enable financial activities. This article’s empirical material takes the form of (hitherto untapped) archives from the professional association of French private equity funds covering the period from 1984 to 2017, 12 interviews with former presidents of the association and ten interviews with partners of large French private equity funds.

KEYWORDS:

• Private equity
• French capitalism
• accumulation centre
• financial rules
• institutional arrangement

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes on contributors

Marlène Benquet is a tenured CNRS research associate at IRISSO/PSL (France).

Théo Bourgeron is an ERC post-doctoral fellow at University College Dublin (Ireland).

Notes

1 Strictly speaking, funds are financial vehicles created by asset management companies to collect investors’ capital and invest it in companies. However, these asset management companies are commonly known as ‘funds’ and this is the convention we use here.

2 The data were collected by the project Histoire du capital-investissement (Marlène Benquet, IRISSO/Paris-Dauphine University; Paul Lagneau-Ymonet, IRISSO/Paris-Dauphine University; Fabien Foureault, LINES Department/Lausanne University; Théo Bourgeron, University College Dublin).

3 For the sake of confidentiality, interviewees have been anonymised and their names have been replaced with their position in AFIC or the private equity sector, depending on the interview.

4 Indeed, there is no systematic theory of the state in Marx’s work, with the exception of his analyses of Bonapartism. However, readers of Marx frequently disagree regarding whether this analysis is entirely absent (Lefort 1981) or it is only nascent (Keucheyan 2015) in the Marxist theory of capitalism.

5 This approach is distinct from those of neo-institutionalist economic sociology. Indeed, these works mainly focus on the issue of cooperation and coordination between actors (Fligstein 1990, 2001), seeking to highlight ‘strategic action fields’. More focused on the analysis of markets than of capitalism, they do not account for the processes of capital accumulation and the role played by the state in this process.

6 LBO operations consist of buying the shares of a given company using borrowed capital. The LBO private equity fund then uses the profit generated by the company it owns to pay back the loan to the lending institutions.

7 Archive box ‘Direction_1985–1992_AG’, ‘statistiques AFIC’ folder.

8 Communication from the European Commission to the European Council and Parliament regarding the implementation of the Risk Capital Action Plan, 4 November 2003.

9 See Table 1.

10 Archive box Direction_2008–2008_AG_1, Procès-verbal de l’Assemblée Générale, 20 June 2007, p. 4.

11 Archive box ‘Juridique et fiscal_2012–2012_Equipe permanente 2’.

12 AFIC representatives and the finance ministry corresponded in a constant stream of e-mails and letters throughout the François Hollande presidency (see the series of archive boxes from Juridique et fiscal_2011–2012_Groupe dédié to Juridique et fiscal_2014–2015_Groupe dédié).

13 See archive box Juridique et fiscal_2008–2013_Groupe dédié.

14 See archive box Juridique et fiscal_2014–2015_Groupe dédié.

Additional information

Funding

This work was supported by Economic and Social Research Council [grant number ES/J500136/1].