PitchBook has indicated in a new research report that French private markets entered 2026 on a subdued note, with private equity (PE) activity reaching its weakest levels in years amid economic pressures and global uncertainty. However, venture capital (VC) showed greater staying power, and analysts anticipate a gradual recovery as conditions stabilize.
The latest insights from PitchBook highlight a landscape marked by caution but underpinned by long-term potential, particularly in innovative sectors like artificial intelligence.
In the first quarter of 2026, PE dealmaking in France hit a notable low. Total transaction value reached approximately €10.9 billion, representing a 20% decline from the prior quarter and a steep 67% drop year-over-year.
The number of deals also contracted to around 220, marking the lowest count in five years.
This slowdown reflects heightened risk aversion among investors facing France’s modest growth prospects, elevated public debt, and lingering geopolitical tensions.
Consensus forecasts for full-year GDP growth hover near 0.9%, while business confidence has softened and unemployment edged higher.
A key deal in the period involved a €761 million carve-out investment in Isemia, a portfolio of nursing homes and clinics acquired by TwentyTwo Real Estate and Farallon Capital from Emeis.
Such transactions underscore a broader European trend: investors favoring add-on acquisitions to expand existing holdings with lower risk.
In Q1, add-ons accounted for 58% of deal count and 45% of value in France, allowing firms to pursue targeted growth within familiar sectors rather than committing to large new platform investments. Buyouts represented just 24% of activity.
Venture capital proved more resilient. While overall private markets faced headwinds, VC deal flow held up better in the opening quarter, offering a counterpoint to the PE downturn.
Exits across both asset classes remained scarce, however, as the IPO window stayed largely closed and liquidity options stayed limited. This environment has made fundraising challenging overall, though VC capital-raising demonstrated relatively stronger endurance compared to PE.
Understandably, given the challenging global geopolitical environment with the US-Iran-Israel conflict, the report from PitchBook now strikes a note of cautious optimism. Despite current softness, a rebound in activity is expected as macroeconomic uncertainties ease and investor confidence returns.
France’s private capital ecosystem benefits from structural strengths, including a vibrant startup scene and supportive policies for innovation.
Fundraising, though sluggish, could gain momentum if larger funds successfully close and limited partners regain appetite.
Artificial intelligence stands out as a bright spot. France has significantly expanded its AI startup footprint over the past decade, climbing to second place in Europe by deal value—trailing only the UK but showing clear momentum. Continued penetration into the broader ecosystem could drive substantial value creation, attracting both domestic and international capital.
Key French AI players, such as Mistral, exemplify the country’s growing clout in deep tech. Challenges persist, including political and fiscal hurdles that have delayed decisive reforms.
Yet the uneven recovery across Europe—where certain regions like the UK have seen stronger liquidity—suggests France’s market retains competitive advantages for patient investors focused on quality and sector-specific opportunities.
According to the insights from PitchBook, 2026 is now shaping up as a year of measured navigation for French private capital. PE may continue facing pressure in the near term, but VC resilience and AI tailwinds provide reasons for hope. PitchBook has concluded in its extensive research report that as exits gradually improve and capital deployment picks up, the market could transition from its current caution toward renewed expansion, reinforcing France’s position as one of the main European hubs for private investment.