AXA IM targets Japan and Australia for infra debt and equity investments

The insurance giant intends to use infra debt investments as a gateway to new markets.

AXA Investment Managers is looking to step up its exposure to infrastructure debt and equity investments in Japan and Australia, two countries the firm has placed at the top of its list as it seeks to expand beyond Europe.

“We are very keen to become a global player on the infra debt side and Australia is an obvious next step for us in terms of infra debt,” Laurent Jacquemin, head of Asia-Pacific at AXA IM – Real Assets told Infrastructure Investor in a recent interview. “We are getting more and more active in the debt space – we have more than €5 billion of infrastructure debt, mainly in Europe, and made our first [debt] investment in Japan six weeks ago,” he said, referring to a solar PV project in Okayama prefecture.

Following infra debt investments, the company will look to transition into equity, Jacquemin said, leveraging the expertise it gains in each market from investing in debt.

“Our intention is to, for the time being, mainly invest AXA money, first in infra debt, and then open up to third-party investors,” Jacquemin said. “Today, we have invested €1.3 billion to €1.4 billion on the equity side in infrastructure. Our intention is to start opening to third-party firms when we reach roughly €2 billion to €2.5 billion,” he said.

The firm has already held discussions with Australian investors about co-investing in European infrastructure, including one large superannuation fund that Jacquemin declined to name.

“It is someone with huge experience investing in infrastructure in Australia and we feel that combining our expertise could be a win-win for both parties. For them, it’s an opportunity to co-invest alongside the AXA money on a few projects – we’re looking at motorways, airports, a few telecom towers as well, deciding with them what the key focus will be. [We want to] try to leverage their expertise to speed up our understanding of the infrastructure market on the equity side in Australia,” Jacquemin said.

Working with existing investors would help AXA IM – Real Assets break into the competitive Australian infrastructure equity market, he added, which the firm sees as a long-term play due to positive market sentiment and signs from government that infrastructure is important.

“Our strategy will be similar to what we’ve done in Europe and what we’re doing in Japan – we’ll start with infra debt, because it’s easier to find opportunities. On the equity side in Australia, it’s very competitive to get access to good transactions, as there are some very large players already, so there will be very strong competition. But we’ll go step by step, and once we’ve got a good understanding of the market thanks to the infra debt investments, we’ll move to equity. But it will probably take a little bit of time,” Jacquemin said.

The firm is in the process of raising its debut infrastructure fund targeting €1.5 billion. Jacquemin declined to comment on specifics other than to say that AXA IM was focusing on investing its own money for now before seeking funds from third parties.

The firm has been rebuilding its infrastructure business since 2016, three years after a management buyout of AXA Group’s private equity business resulted in the founding of Ardian, a Paris-based fund manager, in which AXA Group holds a 10 percent ownership stake.

In May of that year, AXA IM appointed former PGGM chief investment officer Ruulke Bagijn global head of real assets private equity. According to a statement at the time, Bagijn’s role was to focus on building AXA Investment Managers – Real Assets’ infrastructure strategy.

A few months later, the firm tapped UBS Asset Management’s head of infrastructure for Europe Mark Gilligan to lead its infrastructure equity team and in May 2017, it added another UBS AM executive, Jeffrey Woodard, to its infrastructure equity team, as principal. Bagijn has since left AXA IM and is currently managing director and co-head of Carlyle Group’s AlpInvest Partners’ primary investments team.

AXA IM – Real Assets’ first infrastructure investment since Ardian’s spin-out, came in November 2016 when the firm bought a 42 percent stake in France’s A63 motorway operator from InfraRed Capital Partners in a joint venture with Crédit Agricole Assurances.
More recently, in March this year, AXA IM – Real Assets made its debut direct investment in UK infrastructure, acquiring a 15 percent stake in Agility Trains West from developer John Laing for £230 million ($309.4 million; €262.3 million).