Private equity, real estate private equity, and club deals: the driver of long-term performance

When you start to take an interest in investing, your first instinct is often to look at the most well-known investments : savings accounts, life insurance, rental real estate, or real estate investment trusts. These solutions play an important role in building wealth, but they are not always sufficient to achieve significant long-term value creation.

This is where lesser-known asset classes, often reserved for experienced investors, come into play: private equity, real estate private equity, and club deals. What do they have in common? They are based on an entrepreneurial investment approach, offering higher potential returns in exchange for specific risks and constraints.

A different approach to traditional investments

Unlike investments with short/medium-term returns, which primarily seek to generate regular income (rent, interest, coupons), private equity and real estate private equity mainly aim to create value over time.

Investors are not buying a fixed product, but participating in a project: developing a business, transforming a real estate asset, restructuring an activity, optimizing a portfolio. The final performance therefore depends on the success of this strategy, and not solely on the performance of the financial markets.

This approach explains why these investments are generally:

• little or no liquidity for several years,
• medium- to long-term (often 5 to 10 years),
• potentially more lucrative, but also riskier.

Private equity: investing in the real economy

Private equity involves investing in companies that are not listed on the stock market, at various stages of their development: growing SMEs, mature companies undergoing transformation, or sometimes young, innovative companies.

The aim is to support these companies over several years, providing capital as well as strategic expertise, and then resell the stake at a profit. For the investor, performance is therefore not measured annually, but mainly materializes upon exit.

For a novice investor, private equity allows:

• to expose oneself to companies that are difficult to access directly,
• to diversify its assets outside listed markets,
• to seek long-term performance that is uncorrelated with stock market fluctuations.

In return, you must accept that your funds will be tied up and that visibility will be limited in the short term.

Real estate private equity: creating value in property

Real estate private equity is based on a similar logic, but applied to real estate. It is not a question of collecting regular rent, as with an SCPI, but of transforming a real estate asset to increase its value: renovation, change of use, restructuring, real estate development.

The investor acts as a shareholder in the project, alongside the real estate operator who will carry out the project. Performance will depend on meeting deadlines, staying within budget, the local market, and the ability to resell the asset under favorable conditions.

Real estate private equity is often valued for:

• its link to tangible assets,
• its high yield potential,
• its role in diversifying an investment portfolio.

But here again, liquidity is limited, and the risk depends heavily on the quality of the project sponsor and the project itself.

Club deals: investing together in a targeted project

Club deals are a specific type of private equity or real estate equity investment. Several investors join forces to finance a single project that is clearly identified from the outset.

Unlike diversified funds, club deals offer a high degree of transparency: investors know exactly what they are investing in, with a business plan, an estimated duration, and an exit scenario.

For novice investors, club deals can be attractive because:

• they make the investment more concrete and understandable,
• they provide access to projects usually reserved for professionals or experienced investors,
• they often offer a strong alignment of interests with the operator.

On the other hand, focusing on a single project involves a higher risk, which is why it is important not to devote an excessive portion of your assets to it.

A key role in a balanced wealth management strategy

Private equity, real estate private equity, and club deals are not investments to be used on their own. They are most effective as drivers of long-term performance, complementing more defensive or income-generating solutions.

For a novice investor, the challenge is not to seek maximum returns, but to understand the role of each component in their portfolio:

• secure part of one's capital,
• generate revenue,
• and devote a reasonable portion to value creation.

When properly integrated, these investments can play a decisive role in building solid wealth, provided that investors are willing to accept the long time frame, illiquidity, and importance of rigorously selecting projects and partners.

Go through a specialized intermediary platform allows you to benefit from a selection of projects that have been rigorously analyzed and structured by professionals, while pooling expertise and risks.