AXA spin-out talks progress as infra fund nears €900m

AXA Private Equity's spin-out talks are progressing, with a structure emerging that will give its employees a significant stake in the business. The new clarity has given the fundraising of its latest infrastructure vehicle fresh impetus.

Fundraising for AXA Private Equity’s (AXA PE) third infrastructure fund has picked-up again with the vehicle expected to pass the €900 million mark in the coming weeks, sources familiar with the fundraising told Private Equity International.

AXA PE had managed to raise some €750 million by the end of last September, but fundraising slowed down considerably after the French insurer announced that it was performing a strategic review of AXA PE – its private equity arm – which could result in a sale.

However, a spin-out structure is now close to being finalised, sources said, which has allowed Fund III to resume closings recently. AXA is targeting €1.5 billion for its third fund and plans to fundraise until August, although it can extend that deadline.

Regarding the spin-out, AXA PE seems to be moving toward a structure that will see its employees and top management retain a significant stake in the business. Insurer AXA Group will also keep a stake in AXA PE, with new entrants like Canada’s Caisse de Dépot et Placement du Québec – said to be the largest investor after AXA Group – and Singapore sovereign fund GIC also coming onboard as partners, among other smaller investors.

An important part of the spin-out deal is AXA Group’s commitment to continue to invest significant amounts in AXA PE’s family of funds over the next seven years or so. This had previously been a sticking point which had slowed negotiations, as Private Equity International reported earlier this month.

AXA PE’s third infrastructure vehicle made its first investment last February, when it acquired a 10 percent stake in Spanish oil storage and transportation firm Compania Logistica de Hidrocarburos, the first seed investment of the fund. 

The private equity arm has two prior infrastructure funds. The first was a €200 million vehicle formed specifically so that it could acquire a stake in SANEF, the French motorway operator. Its second fund closed on €1.1 billion. Like its two predecessors, Fund III is also expected to focus on investments across France, Italy, Germany and the UK.