AXA Private Equity has closed its Fund of Funds II on €250 million ($306 million), in line with the target amount stated when the fund was launched in May 2003.
The fund, which announced a first closing of €120 million in June 2003, is an early secondary fund of funds, meaning it makes investments in private equity funds post-closing but before 50 percent of commitments are drawn down.
This contrasts with primary funds of funds, where investments are made at the time of initial formation, and mainstream secondary funds of funds, where investments are made in funds where capital drawn down exceeds 50 percent.
The fund, which is 25 percent committed, has made seven investments so far. More than half the investments made so far (53 percent) are from 2003 vintage funds, with 28 percent 2002 vintage, 16 percent 2001 vintage and three percent 2000 vintage.
In a statement, AXA said the benefits of early secondaries include: the initial risk of the investment being borne by the prior investor; the advantages of not dealing with a blind pool of assets; and diversification from accessing earlier vintage funds.
Investors in the fund comprised: insurance companies (48 percent); pension funds (35 percent); asset managers (ten percent); and foundations (seven percent). By geography, the investors came from: continental Europe (46 percent); the UK (22 percent); North America (20 percent); Middle East (seven percent); and Asia (five percent).
Dominique Senequier, chief executive officer of AXA Private Equity, said the unit had enjoyed great success in Germany where it arrived in the market “just as everyone else was moving out”. But she added that, having built its presence in the Eurozone, it was now looking to develop its UK operations headed by managing director James Pitt.
Secondaries funds continue to enjoy a successful time in the fundraising market, and do not seem to be finding it too hard putting the money to work. Market sources say Coller Capital, which closed a $2.5 billion fund in October 2002, could return to the fundraising trail later this year having invested around 50 percent of the capital raised.
AXA Private Equity manages over €4.5 billion of private equity investments and deploys over €700 million annually in the asset class. It has over €3.5 billion in primary and secondary funds of funds and over €1 billion in direct investments. In January 2004, its €480 million Axa Secondary Fund II acquired a portfolio of 45 direct investments from BdW, the German private equity firm owned by Allianz.