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AXA Private Equity launches $200m fofs

AXA has started marketing for its most recent offering – a $200 million fund-of-funds dedicated to the US and Western Europe. The new fund follows the success of the group’s secondary fund, which closed earlier this year at $480 million, exceeding its target by $130 million.

Fund raising has not yet started and the AXA team does not expect it to be an easy ride. “When we do start [fund raising] in 2003 it will, as ever, put a significant extra load on the team in terms of time commitment,” says James Pitt, who has recently joined AXA Private Equity as head of the London office in anticipation of the planned fund launch. He adds that the fund raising environment is challenging for all participants in alternative assets at the moment, and the private equity fund-of-funds world is not immune. “However, we are seeing a clear divergence in ability

to raise new funds between well established players and relative newcomers.

Investors have become more selective in evaluating past performance with a

strong appetite for the best teams and none for lower-quality ones.”

Commenting on the demand for this type of product in the current climate Pitt says: “The private equity market remains an attractive area to invest in, and

accordingly, fund-of-funds, which offer a number of attractions including

potentially enhanced risk adjusted returns through underlying fund

diversification, continue to be successfully raised.” He adds that fund-of-funds provide an important way for large or non-European investors to access the smallest

or mid-size funds. In Europe private equity fund-of-funds represent over 30 per cent of committed capital, he says.

As far as opportunities are concerned Pitt says there are some very interesting high quality funds in continental Europe, the UK and the US. In Europe in particular there are some good opportunities in so-called ‘spin-out’ teams, in UK-based funds and some Continental European ones and in the US, in $400 million to $1,500 million buyout funds. As far as venture is concerned he says: “We see fewer interesting themed venture funds in either the US or Europe at the moment except for a handful of small funds with very experienced teams.”

AXA Private Equity manages and advises private equity funds with assets in excess of €4.2 billion with equity interests in over 80 companies. The team’s expertise spans various sectors – LBO, venture capital, growth expansion, recovery and fund-of-funds.

Axa’s primary fund-of-funds business (totalling around €1 billion) was previously a separate concern within the AXA Group but was incorporated into AXA Private Equity last July. AXA Private Equity is managed by an executive committee: Dominique Senequier, CEO, Vincent Gombault, head of primary and secondary fund-of-funds, and Dominique Gaillard, head of direct funds.

AXA Private Equity has also recently ended its joint venture with American International General Capital Partners (AIG), following a decision to cease activity in the emerging markets. The two groups joined forces in January 1999 to create and manage private equity funds. The collaboration was intended to blend AXA’s knowledge of Europe and the US with AIG’s expertise in emerging markets. Two generations of fund-of-funds were launched under the joint venture. But when AXA decided to withdraw from the emerging markets and focus its fund-of-funds business on the US and the Europe, the joint venture with AIG no longer fitted its strategic priorities.