AXA Private Equity has put more than $2.6 billion to work on the secondaries market since April, having most recently purchased a $1.9 billion portfolio of fund interests from Bank of America.
The firm has said it represents one of the largest-ever secondary deals, but has declined to provide details of the terms. AXA noted in a statement the portfolio is a “high quality, mature buyout funds portfolio”, and “substantially strengthens” its US fund exposure, but declined to provide further detail.
Vincent Gombault, a managing director of AXA’s fund of funds group, noted the assets are “some of the best-managed funds”, offering AXA’s LPs “strong potential in terms of value creation”. He added that the firm has been very cautious over the past two years in making secondary purchases and now feels “conditions are right” to make them.
A source close to the transaction said the funds were 2005, 2006 and 2007 vintages that Bank of America had invested in from its balance sheet. About 90 percent of the interests are US funds, with the balance being Europe-focused vehicles.
It is unclear if Bank of America initiated the sale process prior to the proposal of the “Volcker Rule” presently being debated by US Congress. If passed, it’s expected it would force bank holding companies to divest proprietary private equity funds and assets.
Jim Forbes, an executive in Bank of America’s global principal investments group, said in a statement the transaction lets the bank reduce its private equity investments and unfunded commitments and “manage its risk-weighted capital over the long-term, while also allowing the bank’s private equity team to focus on its core investment business”.
The investment was made from AXA's fourth secondaries fund of funds, closed on $2.9 billion in 2007 and nearly fully committed.
Earlier this week, AXA confirmed it had entered 30-day exclusive talks with French bank Natixis to purchase some of its private equity operations, which were valued at €543 million at the end of 2009. The operations would include iXEN Partners and NI Partners as well as Initiative & Finance Gestion, according to a Wall Street Journal report.
Secondaries investor Coller Capital had also reportedly showed interest in purchasing some of Natixis' French private equity operations, which are being spun out so its parent can focus on core activities, but a Coller spokesman declined to comment on the “industry rumours”.
Anna Reitman contributed to this report.