As financial firms and banks are seeking ways to exit their private equity investments, French insurer AXA SA’s (EPA:AXA) investment unit has put together a USD7.1bn (EUR5.6bn) fund to take advantage of this trend and acquire buyout stakes offered at a discount, according to a Financial Times report.
Axa Private Equity has raised the money from outside investors and it is looking to spend it on secondary deals, targeting stakes in private equity firms such as KKR (NYSE:KKR) in the US and British Permira Advisors LLP.
The paper cited Axa Private Equity’s head of fund of funds, Vincent Gombault, as saying that he expected banks to continue selling private equity stock for the next two to three years, estimating the value of the stock to be put up for sale at between USD40bn and USD50bn.
Banks, pension funds and insurance companies are willing to sell their long-term, risky private equity commitments at a discount as holding them became more expensive due to tougher regulatory norms imposed after the financial crisis.
Many pension funds in the US, which are the largest private equity investors worldwide, have been selling part of their buyout positions after making large investments in the sector in 2006 and 2007, the Financial Times cited Brenlen Jinkens, the chief in London of secondary deals advisor Cogent, as saying.
The money raised by Axa Private Equity for such deals is double compared to the initial amount projected by the French insurer, the report said.