FIVE QUESTIONS WITH… Benoit Verbrugghe, Head of AXA Private Equity, North America

1. AXA Private Equity is the latest private equity manager to spin out or be sold by a major European financial institution. Why is this happening?

The company has been around for 17 years, and AXA (the parent company) has been, and will continue to be a good partner. But after 17 years, we have a good opportunity to become independent. Since we manage $31 billion, now is probably a good time to change the structure so that we’ll have the right organisation for the next 17 years. And because employees in the new firm will own around 40 percent of the new company, the move is definitely a strong motivator for the team. 

2. So, the financial crisis is not one of the reasons for AXA Private Equity’s spin off?

No, because AXA (the parent company) will continue to invest in private equity. They want to deploy around 4.8 billion euros over the next five years. And they will do it alongside us. This gives AXA Private Equity the ability to continue its development over the next 20 years. This is a very good sign of trust, and it is really a good opportunity for both parties. And AXA will stay on as a minority shareholder in the company.

3. I hear you are probably going to change the AXA Private Equity name at some point.  When will you be doing that? 

We can use the name for two years, so we are now working on a new name.

4. What does this deal mean for your limited partners?  Are they happy or concerned about the change? 

We believe this will be a positive transaction for our investors. We took almost 18 months to get to this agreement, and it took so long because we wanted to give clients guarantees that there would be continuity and that management would remain in control of all operational and investment decisions. And because we will keep exactly the same standards, we believe that investors will be happy. The employees will also be major shareholders in the new company, which is definitely a very positive sign as far as motivation and alignment of interests.

5. In the last year, AXA Private Equity closed co-investment funds and secondary funds.  The firm seems to be active in almost every type of private equity area, including venture capital, infrastructure and distressed debt.  Where is the level of interest growing fastest among your investors?

It’s been about the same for all of them. Last year, we were able to raise a few billion dollars for a very significant secondary fund. We just closed a new infrastructure fund, and all of these funds saw increases over their predecessors. We are also raising a buyout fund, and again we expect that fund to be bigger than the the previous fund.