Private equity investment vehicle: effectively structure your private equity transactions
Private equity (or private equity) is attracting more and more investors looking for performance and diversification. But to effectively access these unlisted markets, legal and financial structuring is important.
That's where the private equity investment vehicles : tailor-made tools that allow you to manage, secure and optimize your operations. Whether you are a private investor, a professional or an entrepreneur, choose the right one investment vehicle can make all the difference.
Learn about the main types of structures, their advantages, their constraints, and how to use them to build a winning strategy.
What is a private equity investment vehicle?
One private equity investment vehicle is a legal or financial structure created specifically to pool the capital of investors in order to acquire stakes in unlisted companies. This type of vehicle plays a central role in any private equity strategy, whether asset management, transfer) or entrepreneurial (growth financing, business takeover).
This vehicle is used as support for collective investment, by bringing together several investors around the same operation. These may be limited partnerships, professional private equity funds (FPCI), or even structures such as Club Deal.
Unlike traditional vehicles such as index funds, listed shares or SCPIs, a private equity investment vehicle targets companies not listed on the stock exchange, often in the development or transmission phase. The level of involvement, the duration of investment (often 5 to 10 years) and governance are generally more pronounced.
Investing via a private equity vehicle allows access to exclusive opportunities on unlisted markets, with a potential return that is often greater than traditional assets. It is also an effective diversification tool for a portfolio, by integrating assets that are less correlated to financial market fluctuations.
The main types of private equity investment vehicles
Whether you are an individual investor looking for diversification, a professional structuring a tailor-made transaction, or an entrepreneur looking to pool a round of funding, Choosing the right private equity investment vehicle is strategic. Each has its own rules of the game, its advantages and its constraints.
FCPR (Risk Mutual Investment Fund)
It is one of the most accessible vehicles for individuals. Regulated and managed by a company approved by theAMF, it makes it possible to invest in unlisted companies, with an advantageous fiscal framework. By keeping the shares for at least 5 years, capital gains can be exempt from tax (excluding social security contributions). It is eligible for schemes such as IR-PME. However, the FCPR must invest a significant portion in risky assets, which limits some strategies.
FPCI (Professional Capital Investment Fund)
More flexible than the FCPR, the FPCI is reserved for professional investors. It allows freer management, with the possibility of integrating atypical assets or more specialized strategies (development capital, venture capital, etc.). Less constrained in terms of regulations, it is aimed at investors who are able to assess the risks taken themselves.
SLP (Free Partnership Society)
Inspired by the Anglo-Saxon model of limited partnerships, SLP combines the flexibility of a fund and the legal personality of a company. It allows governance, investor rights and remuneration arrangements to be freely defined. Ideal for complex transactions (fund of funds, multi-jurisdictional, co-investments), it also benefits from transparent taxation, with direct taxation at the level of partners.
SPV (Special Purpose Vehicle)
Is a structure dedicated to a specific operation. Widely used in LBO (Leverage Buy-Out) arrangements, this vehicle makes it possible to isolate risks and to legally structure a single transaction or a given asset. It is often used as part of Clubdeals or one-off investments led by informed investors.
SICAR (Venture Capital Investment Company)
Is a Luxembourg structure designed for investors wishing to deploy capital on a cross-border scale. It offers a flexible and fiscally optimized framework, while allowing a wide variety of investments in innovative or growing companies.
Advantages and disadvantages of private equity investment vehicles
Investing via a private equity investment vehicle offers a structured framework for accessing unlisted companies, often with high potential.
The main advantage lies in the prospects of high efficiency, much better than traditional investments.
These vehicles also allow Diversifying a portfolio by integrating assets that are uncorrelated from the financial markets, while accessing exclusive transactions, often reserved for restricted groups of investors.
In return, you have to accept a significant illiquidity: the money is locked up for several years, usually between five and ten years. La duration of commitment is therefore long, and early release is rarely possible.
In addition, the legal complexity of these structures requires serious support to avoid mistakes.
These vehicles are therefore aimed at investors ready to tie up their capital over the long term, in exchange for exposure to rare and potentially very profitable opportunities.
How do you choose the right private equity investment vehicle?
The choice of investment vehicle should always be based on your personal goals. If you are looking for capital growth, structures like FPCI or SLP may be suitable for their ability to aim for high IRRs. If the diversification is a priority, an FCPR can allow you to broaden your exposure without concentrating risks on a single transaction.
The Investor profile also plays a key role. An individual will more easily access an FCPR or a well-structured club deal such as the Private equity club deal. While a professional or an institutional can turn to more technical arrangements, such as SLP or SPV, to respond to more targeted strategies.
You should also take into account your investment horizon: are you ready to freeze your funds for 7 to 10 years? And what is your risk tolerance? Private equity can offer high returns, but it involves less visible volatility and a lack of liquidity.
Finally, don't forget that the success of an operation often depends on the quality of the support. Calling on experts to structure, secure and monitor your investment is not only recommended, but often decisive for the success of the project.
Overlord's support in structuring your private equity investment vehicle
Overlord supports investors in setting up their investment vehicle, with a tailor-made approach. Each project is the subject of a custom analysis, according to your objectives: growth, transmission, diversification.
We advise you on the choice of legal structure the most suitable (FCPR, FPCI, SLP, SPV...) and ensure the connection with specialized partners: notaries, chartered accountants, approved management companies.
Our team remains present at each stage of the project, from initial assembly to investment monitoring, to guarantee safety, consistency and efficiency.
FAQ — Frequently asked questions
What is a private equity investment vehicle?
It is a structure that allows you to invest in unlisted companies, alone or with several people. It is used to organize the investment, secure the flows, and legally structure the operation.
What are the advantages of an FCPR compared to an FPCI?
An FCPR (Fonds Commun de Placement à Risques) offers attractive tax advantages, such as tax reductions (e.g. IR-PME in France), and is accessible to individual investors, unlike the FPCI (Professional Capital Investment Fund), which is reserved for professionals. The FCPR is also more regulated, offering some security and transparency. However, FPCI is more flexible, with fewer investment constraints and greater strategic freedom, but it requires more sophisticated investors and does not offer the same tax advantages.
How does an SLP work?
The SLP is a flexible contract structure. It allows the rights and roles of investors, governance rules, and remuneration arrangements to be freely defined. It is suitable for complex transactions: co-investments, multi-project structuring or cross-border strategies.
What are the criteria for choosing between an FCPR and an SPV?
The FCPR is suitable if you are looking to diversify across several targets via a managed fund. It offers a shared framework. SPV is preferred if you invest in a single precise operation, with direct control, often in co-investment. So the choice depends on number of targets, the degree of involvement desired, and risk profile.
Can you invest in a private equity investment vehicle via life insurance?
Yes, if the life insurance contract offers units of account eligible for private equity. Access is generally reserved for high-end contracts (Luxembourgish or French), with a higher admission ticket.
Is there a real estate investment vehicle suitable for individuals?
Yes, structures such as SCPIs, OPCIs or unlisted real estate companies are real estate investment vehicles accessible, often with a moderate admission ticket. They allow you to invest in real estate without having to manage a property directly, while sharing risks.
Why choose an investment vehicle in Luxembourg?
Luxembourg is recognized for its stable regulatory framework, its attractive taxation and its legal flexibility. One Luxembourg investment vehicle is often preferred for international transactions, in particular via SICARs or SIFs, which are widely used by professional funds.
Investing in the unlisted is not just looking for returns: it's deciding to take part in the creation of real value, as close as possible to companies. But for the operation to be solid, efficient and in line with your objectives, The choice of investment vehicle is decisive.
FCPR, FPCI, SPV, SLP... each structure has its strengths and constraints. What matters is not to follow a trend, but to build a tailor-made strategy, adapted to your horizon, your risk tolerance, and your ambition.
At Overlord, we don't offer you a standard solution. We help you structure the right vehicle, at the right time, for the right project, with the right partners around the table.
Do you have a project or an intuition to explore? Let's talk about it and Make an appointment with an Overlord expert. What you imagine can take shape, provided you are well supported from the start.