FRANCE Trends and Developments Contributed by: Nicolas Karmin and Pauline Le Faou, Sullivan & Cromwell LLP
described above, and the added uncertainty stem - ming from the announcement of US tariffs. On 27 July 2025, the European Union and the Unit - ed States reached a trade agreement establishing a 15% unified tariff on most EU exports to the US effec - tive from 15 August 2025 and replacing the initially planned 30%. The agreement also includes mutual tariff exemptions on strategic sectors such as aero - space, certain chemicals, generic pharmaceuticals, and semiconductor equipment. In exchange, the EU committed to purchasing USD750 billion in US energy in total and investing an additional USD600 billion in the American market. The agreement is designed to provide predictability and reduce trade tensions that have generated sig - nificant uncertainty in markets over the past months. However, while EU officials presented this as a bal - anced deal, French reactions were mixed. The French President called for continued negotiations, especially to secure further exemptions on wines and spirits. He also suggested that the anti-coercion instrument developed by the EU could be activated in the future to safeguard European interests. Record High Dry Powder Levels and Signs of Relative PE Fundraising Slowdown Limited fundraising activity occurred in 2024, with only circa EUR10.1 billion raised, compared with circa EUR23 billion capital raised in aggregate in 2023, a very active year on the fundraising front. The slowdown in 2024 is not necessarily the reflec - tion of gloomy perspectives on the PE market; fol - lowing a particularly active fundraising environment over the past few years in France, the level of dry powder available remains very significant. As of 31 December 2024, the level of dry powder amounted to circa EUR37 billion, while in 2023 the level of dry powder amounted to circa EUR46 billion. Such level of dry powder is still higher than the one observed over a ten-year period (save in 2022 and 2023). Given the requirement for sponsors to deploy the funds commit - ted by limited partners within a limited period of time, this dry powder level should support an upcoming uptick in PE deal activity.
In terms of the number of funds raised, a clear slow - down can be noted since 2021, with a drop by circa 71% between 2021 and 2024, which should also be understood in light of the increase in the size of the funds raised in France. On a separate note, a new sort of momentum in the fundraising landscape may result from the introduction in early 2024 of the European Long-Term Investment Funds 2 Regulation (ELTIF 2), which should favour the democratisation of the PE world for retail inves - tors by addressing many of the constraints previously imposed (such as minimum investment requirement, required amounts for certain eligible assets, etc). It remains too early to predict if these new funds will be successful, but it is a promising development for the European and French PE market. Another interesting development is the entry into force of the Green Industry Act in France in October 2024, which broadens retail access to private equity through life insurance and Retirement Savings Plans (PER). Indeed, the law provides for the allocation of a por - tion of certain PERs and life insurance contracts to investment funds that are primarily exposed to unlist - ed assets or to securities eligible under the PEA-PME framework. As for funds’ profiles, France benefits from a more diverse fundraising environment than other European countries, resulting in a well-balanced representation of the various categories of funds (including growth funds, first-time funds as well as small, middle market and mega funds). Subdued PE Deal and Exit Activity Robust PE deal activity in spite of a relative slowdown As mentioned in the general overview above, the level of PE activity has undergone a downturn since 2021 and 2022, in particular with a decrease in value by circa 17% between 2022 and 2023. In spite of an increase in volume by circa 8% between 2023 and 2024, the aggregate value of French PE transactions remained more than 10% below the levels of 2021 and 2022. The same trend follows in H1 2025, with a decrease of circa 20% compared to H1 2024 in terms of aggregated value of French PE transactions. This
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