Sale slows fundraising for AXA Fund III

The private equity arm of the French insurer has added just over €50m to the €750m it had managed to raise by late September. AXA aims to raise up to €950m for its third infrastructure fund by year end, but potential LPs are waiting to find out who the unit’s new owner will be.

France’s AXA Private Equity (AXA PE), the private equity arm of insurance giant AXA, has managed to raise over €800 million for its third infrastructure fund, sources familiar with the fundraising told Infrastructure Investor.

AXA PE had managed to raise about €750 million by the end of September, but fundraising slowed down after the French insurer announced that it was performing a strategic review of AXA PE, which could result in a sale. That has led potential limited partners (LPs) for AXA PE’s third infrastructure fund to adopt a ‘wait and see’ attitude until the unit’s new owner is known. 

Still, sources said Fund III should be able to end the year with between €900 million and €950 million of funds raised and close the fund on €1.5 billion in March 2012, as originally planned. If that doesn’t happen, AXA has until next August to complete the fundraising, sources added.

A Financial Times report in late October indicated that there are only two bidders interested in AXA PE: Caisse de depot et placement du Quebec, billed as Canada’s largest pension fund manager, and the Government of Singapore Investment Corporation. Kohlberg Kravis Roberts, Blackrock, 3i and TPG were all said to have been interested in AXA PE at some point, the newspaper reported.

According to the sources, AXA PE’s employees will have an important role in running the business and should retain between 30 percent and 40 percent of the unit once the sale is completed. They may also end up with voting rights equivalent to 50 percent ownership, giving them a role as co-managers. The sources suggested potential buyers are aware of these terms and approve of them.

As previously reported on Infrastructure Investor, AXA will still continue to commit funds to AXA PE’s new ventures after the sale is concluded.

AXA PE’s third infrastructure vehicle made its first investment in February, when it acquired a 10 percent stake in Spanish oil storage and transportation firm Compania Logistica de Hidrocarburos, the first seed investment of the fund. 

The private equity arm has two prior infrastructure funds. The first was a €200 million vehicle formed specifically so that it could acquire a stake in SANEF, the French motorway operator. Its second fund closed on €1.1 billion. Like its two predecessors, Fund III is also expected to focus on investments across France, Italy, Germany and the UK.