New Fund Becomes First In France To Combine Private Equity and Property

by Ulrika Lomas, Tax-News.com, Brussels

13 September 2004

Nord Europe private equity and property group UFG has launched France’s first investment fund to combine both property and private equity, a Reuters report has revealed.

Known as Diademe Innovation I, the €50 million closed-ended fund will invest 60% of its assets in private equity and the remaining 40% in real estate.

The property element will be invested across seven to ten office real estate funds and managed by UFG which has some €2.6 billion in property assets under management, according to Reuters.

The fund is anticipating returns from its real estate assets in the region of 6% to 8%. Money market funds are normally expected to generate 3% to 4%.

In addition, the private equity element of the fund is expected to generate returns up to 30% from 20 to 25 firms located mainly in France, Belgium and Luxembourg.

French private equity funds can benefit from certain tax advantages including a reduction in capital gains tax from 27% to 10%, provided money is invested for a minimum of five years.

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