AXA Closes On $1B Secondary Fund –

Exceeding its own fund raising goals by more than $200 million, AXA Private Equity announced last week that it closed AXA Secondary Fund III with $1.04 billion. Additionally, the firm has already closed on one deal from the fund.

The Paris-based firm, which also has offices in Frankfurt, London and New York, is a subsidiary of insurance company AXA. The group has 21 secondary investment professionals. The new fund will focus on buyout and venture funds that have drawn down more than half their capital.

The firm initially had a fundraising goal of $800 million, but easily exceeded its target. Limited partners in the fund include Pennsylvania State Employees Retirement System (SERS), Cornell University and Caisse de Depot et Placement du Quebec. Half of the LPs in the fund are European and 25% are North American with the remaining 25% of LPs coming from Asia and the Middle East. The bulk of the new fund comes from third parties; AXA invested less than 25% in fund III.

AXA Private Equity’s upcoming secondary fund is more than double the size of AXA Secondary Fund II, its last pure secondary fund. That fund, which closed in late 2001 with $480 million, is now fully invested. LPs in Fund II include Bombardier Pension Funds and the Caisse de Depot. AXA’s premier secondary fund closed on $220 million in 1999.

Fund III has a 15% carry rate and its management fees remain unchanged from Fund II. Credit Suisse First Boston served as a placement agent for the fund in the United States.

The new fund has already closed a large deal. It agreed to buy a portion of Credit Agricole’s private equity unit for approximately $560 million. The holdings include shares in 23 buyout funds in the United States and Europe and equity investments in 57 French companies.

The French bank’s private equity assets include direct investments as well. To avoid potential conflicts of interest with secondary LPs, only AXA money is used for primary investments. The primary investment side is an increasingly important element of secondary players, as it makes for a quicker close and general partners favor secondary buyers who are already LPs. AXA Managing Director Chistophe Florin says that the firm is now looking at a potential deal involving 60 funds and AXA Private Equity is already an investor in 40 of them.

According to Florin, the second fund purchased more European assets, with 65% of its buys coming from Europe and 35% coming from North America. The deal flow it’s seeing for Fund III has a greater share of U.S. assets so far. “We thought it might be about the same for the new fund, but we are now seeing a lot of American transactions being done,” says Florin. “The U.S. market is increasing quickly.”

AXA Private Equity has funds dedicated to buyouts, venture capital, development capital and in funds-of-funds. The private equity group manages more than $8.6 billion.