As AXA gears up for a possible sale of its private equity unit, executives at the company could find themselves borrowing from The Carlyle Group’s playbook. AXA Private Equity, and particularly its chief executive, Dominique Senequier, are known to be seeking a management-led buyout financed in large part by one of its suitors.
Such a structure is exactly what Carlyle agreed to when it acquired a 50 percent voting stake (and 60 percent of the equity) in AlpInvest Partners, one of Europe’s largest fund-of-fund managers, earlier this year. For Carlyle, the merger helped to diversify its slate of businesses, and more importantly, helped to increase its tally of assets under management prior to its expected IPO next year.
For AXA Private Equity’s investors, a management-led buyout would offer incentives for keeping employees on board, something especially crucial in an era of “key-man” provisions. Senequier’s preference for a management-led buyout was first reported in the Financial Times.
For AXA Private Equity’s employees, such a structure would mean that they stand to gain a bigger stake in their own success, something nearly universally lauded in private equity, but not at firms owned by financial conglomerates like AXA. For AlpInvest, which had previously been owned jointly by APG and PGGM, the two largest pensions in the Netherlands, the sale to Carlyle and AlpInvest’s own employees, meant that those employees would enjoy for the first time the benefits and responsibilities of owning stakes in the company they work for.
Thus far AXA, which is mainly an insurance firm, has received as many as five bids for its private equity unit, according to press reports, which also said that the business could fetch between $350 million and $600 million.
The AXA unit is one of the largest private equity players in Europe with $28 billion in assets, a figure that has grown by $10 billion since 2006. The unit is one of Europe’s largest purveyors of funds of funds. One buyout executive told sister news service Reuters, “It’s really a nice and growing business, well-managed with diversified revenue streams and an outstanding track record.”
Managed by Senequier, one of France’s best-known female executives, AXA Private Equity has been especially active in acquiring the private equity assets of banks needing to bolster their balance sheets. Within the last year, AXA has bought up private equity assets of Citigroup for $1.7 billion, of Bank of America for $1.9 billion, and of Barclays for $740 million.
The parent company is the second-largest insurer in Europe. While a sale of its private equity unit is by no means assured, analysts told Reuters that one motivation for a sale would be to help the firm boost assets to meet stricter capital requirements that are part of the industry’s “Solvency II” regulations.
To be sure, the firm has also been hit by the slumping European economy. One of the firm’s holdings is a 5 percent stake in BNP Paribas, a French bank that has lost more than half its value in the last six months, reflecting investor worries about the Greek debt on the bank’s balance sheet.