AXA Private Equity has paid $1.7 billion for Citigroup’s portfolio of private equity assets, which comprise both fund commitments and direct investments.
The investment will be funded using capital from AXA PE’s latest secondaries fund, according to a source with knowledge of the process. The fund, AXA Secondary Fund V, is targeting between €3.5 billion and €4 billion in commitments, according to research group Private Equity Connect, part of PEI.
The deal follows AXA’s $1.9 billion acquisition of private equity fund investments from Bank of America in April last year. That deal was funded using capital from its fourth secondaries fund, which raised $2.9 billion in 2006.
Citi’s portfolio comprises 207 limited partnership interests, mostly in buyout funds and including stakes in vehicles managed by KKR, Blackstone Group, Clayyton, Dubilier & Rice, Providence Equity Partners and Carlyle Group, along with an undisclosed number of direct investments.
Vincent Gombault, a member of AXA PE’s board and a managing director in the firm’s funds of funds unit, said in an interview with Private Equity International: “We first made contact with Citi about this deal two years ago. Clearly a deal as complex as this takes a long time to put together. But it's the type of transaction we love – so complicated that the seller cannot run an auction process. We focus on good assets that we can understand. We were first to come to them with an acceptable offer.”
The portfolio had been funded by Citigroup’s proprietary capital, and did not include funds or investments managed by Citi Capital Advisors, the bank’s in-house alternative asset management unit.
Dominique Senequier, chief executive of AXA Private Equity, said: “This is the culmination of a highly collaborative and close working relationship with Citigroup. Because of our approach, combined with our proprietary database, we were able to offer a global solution to Citi. The excellent visibility of the quality of the assets enabled us to offer a fair price.”
Gombault added: “The Citigroup assets are some of the best-managed funds offering strong potential in terms of value creation.”
Mark Mason, chief operating officer of vendor Citi Holdings, which manages assets targeted for disposal by the bank, said the deal demonstrated Citi’s progress in off-loading non-core assets on its balance sheet.
The AXA deal comes as fellow French firm Unigestion announced the final closing of its latest secondaries fund, Unigestion Secondary Opportunity II. The firm said in a statement it had garnered €190 million in commitments, surpassing its €150 million target. The French group also said it planned to hold a first close for its Unigestion – Ethos Environmental Sustainability fund, which will target investments in sectors like renewable energy, later this month.