AXA hands Asian entities greater role in PE fund selection amid ‘ambitious’ alts plan

AXA Hong Kong and Japan will source PE opportunities as an extension of the insurer's current primaries model, which is managed centrally from Germany.

AXA Group is granting its Asian entities an enhanced role in regional private equity fund selection amid plans to increase the latter’s alternatives exposure, Private Equity International has learned.

Sabrina Du AXA
Sabrina Du: Bullish on Asian PE

The €887 billion insurer’s two Asia-based subsidiaries, the $20 billion AXA Hong Kong and $40 billion AXA Japan, have been tasked with sourcing private equity fund opportunities in the region independently of its global investment team, alternative investment lead Sabrina Du told Private Equity International. The two subsidiaries will pool their capital and commit $60 million to $100 million for each ticket across one or two funds, which have not yet been selected.

This process marks an extension of AXA’s current primaries model, which until now has been managed centrally by a team in Germany, Du noted. Each of AXA’s regional entities makes an annual allocation to a groupwide envelope, which on average commits more than €2 billion on their behalf each year to global funds, with Europe and North America taking the lion’s share.

“AXA typically combines all the tickets from entities to form a meaningful size, which can be more than $200 million,” Du said.

“This enables us to negotiate better terms with managers, and it is also quite efficient for our smaller entities. This year, AXA’s Asian entities in Hong Kong and Japan are sourcing the strategy in Asia – it’s kind of like step one, and if in future other European entities are interested, they could tag along.”

AXA Group has already committed to several Asian private equity funds, though its regional exposure is small relative to the US and Europe. The majority of AXA’s existing exposure to Asia-Pacific private equity funds has come via its fund of funds mandate with Paris-headquartered Ardian, which spun out from the insurer in 2013.

Alternatives account for about one-third of AXA Hong Kong’s growth assets, Du noted.

“AXA Hong Kong is smaller, and we only started to actively invest into alternatives [in] 2015,” she added. “Under the current low interest rate environment, we have this ambitious alternative acceleration plan at group level [in which] AXA Hong Kong will almost double our existing alternative exposure by 2025. And in private equity, we are bullish on Asia.”

AXA’s Asia entities will consider both pan-regional funds and China-focused funds, and are undecided whether to pursue buyouts or growth equity. They will prioritise track record and transparency when evaluating GPs.

“Track records can still tell a story if you really look into the deal,” Du said.

“You have to ask them for a lot of detail when it comes to track record, because otherwise pretty much every manager sounds the same: they will say they have proprietary sourcing and value-add, but if you ask what exactly they’ve done, then they’ve actually got to show a different kind of story. You also need to differentiate between an exited, realised return, rather than a paper return.”

Sabrina Du will be speaking at affiliate title Private Debt Investor’s APAC Forum 2022 in Singapore on 13 April