AXA’s latest secondary offering, which comes almost three years after its predecessor closed, will buy existing positions held by institutional investors in private equity funds, thereby providing investors with short-term liquidity in what is typically a long-term asset class.
The fund closed US$200m above its original target, making it the second largest European secondaries fund to be raised this year.
The new fund has already invested 10% of its amount: a commitment of up to €134m in two Italian mid-market private equity funds –
This closing is the latest in a line of secondaries funds that have launched or closed this year. As well as Coller’s fund, in June London-headquartered specialist
The reason for the growth in their popularity, which is sure to increase in light of the contraction of the LBO market, is a by-product of a maturing industry. Between 2% and 4% of the total commitments made by investors to private equity funds now change hands each year as investors are becoming more pro-active and less reluctant to sell fund stakes. In a survey published by UK private equity consultants and placement agents Almeida Capital earlier this year, an overwhelming majority – 83% – of the 100 investors surveyed had either bought a direct secondary interest in a fund or portfolio of companies (65%) or intend to buy a direct secondary interest (18%).
According to research house Private Equity Intelligence, 11 secondaries funds raised US$7.5bn last year. Thirteen funds are being raised this year with a combined target of US$14.2bn.