AXA closes small cap buyout fund

AXA, the French insurance giant, has underlined its position as a private equity powerhouse with the close of its latest fund, a small cap buyout fund at €353 million ($480 million).

Although a small addition to the company’s €11.3 billion under management in private equity assets, its second small cap vehicle comes hard on the heels of the June closing of its biggest global secondaries fund at $2.9 billion, underlining the extent of its commitment to the asset class.

Its AXA Expansion Fund II will focus on medium-sized companies valued at less than €100m and seeking a financial partner to boost growth. Dominique Gaillard, member of AXA Private Equity’s management board and managing director for direct funds, said it was a significant step up from the 2001 fund, which closed on €65 million and targeted businesses with an enterprise value of less than €40 million.

But he said that fund’s success lay behind the decision to expand the strategy’s geographic reach to include Italy and a new office in Milan with a team of three.

He said: “It takes the team to 11 and the hiring programme will see another two or three join before the end of the year.”

Gaillard said the fund would continue to operate below the radar of AXA’s mid cap buyout fund and the opportunity was huge. “We expect higher returns than from a bigger fund. The deals are smaller and a little riskier. So we are targeting 25 percent or higher for our investors,” he said.

It was an attractive offering for investors. Fundraising took a little under six months and widened the investor base from the first fund to include investors from outside France, including the US and Canada. AXA will hold a little under 30 percent of the fund, while around 80 percent of investors in the first fund re-upped significantly.

The fund has already committed more than 14 percent of its total assets to four investments: Synerlab, a French designer of pharmaceutical products; Trecobat Group, a French builders of single-family houses; Flex Group, a German manufacturer of hand-held power tools; and Welcome Real-time, a developer of payment software.

AXA Private Equity is active across the gamut of private equity activities including buyout, expansion capital, venture capital, co-investment, mezzanine, and primary, early secondary and secondary funds of funds.