AXA Launches Twin International Funds-of Funds

AXA Investment Managers in November began formal marketing for two funds-of-funds, one focusing on the US and one covering Europe and Asia. These are the first funds-of-funds launched directly by the asset management arm of AXA Group, the major international insurance business, although AXA is the majority owner of Donaldson Lufkin & Jenrette, which operates a funds-of-funds business through Wood Struthers Asset Management. However, whereas Wood Struthers’ vehicles are targeted mainly at wealthy private investors, AXA Investment Management is primarily addressing the US and European institutional markets, with a particular focus on relatively new entrants to the private equity asset class.

AXA aims to raise ecu 300 million for Europe/Asia Private Equity Partners LP and $300 million (ecu 252 million) for America Private Equity Partners LLC and has itself committed $50 million to each vehicle.

America Private Equity Partners will deploy 80% of its capital in primary fund commitments, devoting the balance to direct co-investments and secondary fund positions. The US fund-of-funds, which may invest as much as 15% of its total in Canada and Latin America, will dedicate 35% to 45% of its capital to buyout funds, while venture capital and development capital funds will together comprise 30% to 50% of its portfolio by value; the balance will be deployed in mezzanine and turnaround vehicles.

The Western European private equity markets are the primary focus for the Europe/Asia fund-of-funds, which will invest no more than 20% of its total in Asia and the Pacific Rim. Like its US counterpart, this fund-of-funds will aim to build a stage-diversified portfolio.

AXA is seeking minimum commitments of $2 million for the funds-of-funds, and the vehicles offer a 95%/15% carry split on primary and secondary fund investments and a 90%/10% carry split on directs after an 8% preferred return has been achieved.

Managing director Charles Flynn, based at Axa Investment Management’s New York office, heads the management team for the US fund-of-funds, while managing director Phillipe Franceries, based in Paris, leads the Europe/Asia effort.