French private equity groups want employees to invest alongside them in companies they have acquired under plans submitted to the government.

Plans by AFIC, the French private equity lobby group, have been written into a debate by the French parliament next month on laws to encourage share ownership. The government wants employees and pension funds to invest in French companies to defend them from foreign takeovers. Employees would be able to invest in a fund – called an FCPE – alongside a private equity buyer and management. Patrick Sayer, president of Eurazeo, a French private equity group, and president of AFIC, said: "We believe we can better align the interests of employees with private equity companies and show that we are investing for the longer term as well as making capital expenditure within companies to improve the business." Funds that allow employees to invest in their employer have been limited to equity investment. Sayer said discussions needed to be held with the government about how to divest from FCPE funds to suit private equity. Investors must hold FCPE funds for a minimum of five years, which would render the sale of buyout companies difficult. The funds would also have to have union approval before being launched. French private equity companies have been unpopular with trade unions, which have accused them of cutting jobs for short-term profit.