AXA Private Equity raises record secondaries fund

Paris-headquartered AXA Private Equity has finally capped its fifth secondaries fund at $7.1bn with an additional sidecar of $900m, making it the biggest pool of capital for buying up limited partner stakes yet raised.

French alternatives group AXA Private Equity has raised more than twice as much capital for its latest secondaries fund as it originally planned, with $8 billion in commitments across AXA Secondary Fund V and its sidecar. It had initially aimed to raise $3.5 billion when it launched the fundraising in 2010.

The firm, which over the last two years has been one of the most active in the secondaries market, raised $7.1 billion for the main fund, with an addition $900 million for a sidecar that will act as a primary fund of funds, it said in a statement.

The fund trumps the previous benchmark set by Lexington Partners, which held a final close for its Lexington Capital Partners VIII fund on $7 billion last year.

Since 1999 we have strived to build a detailed knowledge of the global secondaries market

Dominique Senequier

AXA PE estimates there will be between $40 billion and $50 billion in bank-held private equity assets coming up for sale over the next few years, as banks looks to offload their private equity portfolios in response to regulation. The firm said pricing was acceptable, and predicted that once the wave of bank-led disposals was completed, other financial institutions would look to sell down their exposure to private equity funds.

Dominique Senequier, chief executive of AXA PE, said in a statement:  “Since 1999 we have strived to build a detailed knowledge of the global secondaries market, the best managed funds and the portfolios that offer high potential in terms of value creation. Over the last 13 years, the exceptional track-record of all our funds has won the trust of our investors, based on two fundamentals: visibility and high returns. I am pleased to see further co-investments and commitments, particularly new funds from the AXA Group, all of which signals the confidence our investors have in the firm's capability to invest responsibly.”

Vincent Gombault, managing director of funds of funds at AXA PE, added: “Even though fundraising remains incredibly tough in the current economic climate, our investors recognise that secondary transactions are not executed overnight; rather it takes many months of careful due diligence coupled with a cautious approach to be successful in this market.”

Investors in the fund included the New York City Fire Department Pension Fund, New York State Teachers’ Retirement System and the Pennsylvania State Employees’ Retirement System, according to PEI data. The firm declined to name individual LPs, but said pension funds, government agencies and family offices had committed to the fund. Geographically, the LPs predominantly came from North America, the Middle East and Asia, it said. 

AXA PE has already invested 40 percent of the fund. Deals include: the acquisition of a $1.7 billion portfolio of LP interests and direct investments from Citigroup; a $740 million private equity portfolio from Barclays; and a majority stake in a private equity portfolio from HSH Nordbank valued at €620 million. In 2010, it also acquired a $1.9 billion portfolio of private equity funds from Bank of America Merrill Lynch.