Retail investors and private equity are not normally considered natural bedfellows.

So the news that BPI, France’s state backed investment bank, has created a new fund to encourage French retail investors to invest in French private equity funds, has generated a great deal of interest. 

This isn’t a new trend though: for at least a couple of years, policymakers and regulators have looked with renewed vigour at how to encourage long-term investment by retail investors into private assets. This is despite previous misgivings about the higher costs and reduced liquidity of private equity (it is interesting that the portfolio has been carefully selected to exclude more recently raised funds which are at the start of their investment period; and the headline fee rate looks high compared to typical retail funds, according to the Financial Times):

"The fund’s maximum all-in annual fee has been set at 3.9 per cent and BPI will not charge additional performance fees for the new fund. The bank expects the vehicle to deliver net returns of 5-7 per cent a year." 

Larger European asset managers had already been looking at solutions for the defined contribution pension market, most notably Partners Group, which launched its Generations Fund as a UK NURS product a couple of years ago. But state impetus for a fund product which goes out directly to retail investors is the clearest sign yet that retail money could become a meaningful capital source for private equity managers in a post-Covid marketplace.