Axa Private Equity says it plans to open an office in Beijing later this year as part of its strategy to grow its business activities progressively in Asia.
The firm, which is the private equity unit of French insurance giant Axa, has had an office in Singapore since 2005. “Singapore is good as a central location, but we felt that it’s important to be closer to the [North Asia] market,” says Han Jenhao, head of Axa Private Equity Asia. “The North Asia region is definitely a very important part of the Asian investment space.”
No timeline was given for the opening of the Beijing operation, which will be used to serve clients and facilitate deals in markets such as China, South Korea and Japan, says Han. A few members of the 13-person Axa PE team in Singapore will relocate to the Beijing office, with Han splitting his time between the two Asia operations.
Axa PE has about $28 billion in assets under management or advisory across Asia, Europe and North America. Nearly half of the capital is fund of PE funds, with the remainder spread among a range of strategies, including buyouts, mezzanine and infrastructure.
“In Asia, we have been doing primarily fund of funds with some secondary deals and co-investments as well,” says Han. “That will remain the same for the next few years.”
About 5% of Axa PE’s deal flow is in Asian assets, with the ratio expected to rise gradually in coming years. “We will take it one step at a time, though,” says Han.
China is expected to play a role in the firm’s Asia deal activity, in terms of fund-of-fund investment into mainland private equity vehicles and also raising capital from Chinese institutional investors.
“Chinese investment, or investment into Chinese funds or companies, has been important for us and accounts for a large portion of our program [in Asia],” says Han. Axa PE is also exploring co-investment opportunities with investors in China, in addition to other Asian markets.
On a global scale, Axa PE has been making waves in secondary investments, having closed the industry’s largest fund for such deals, Axa Secondary Fund V, in Q2 this year.
At $7.1 billion, it is reportedly double the amount the firm had set out to raise, and tops the $7 billion raised by secondaries specialist Lexington Partners, whose Fund VII closed in July last year.
Significant secondary deals include Axa PE’s acquisition of $500 million in limited partner interests from Japan’s Mizuho Financial Group in September last year. It also closed a similar deal this month with Ontario Municipal Employees Retirement System. The Canadian pension sold 11 private equity interests to Axa PE for $850 million, joining a trend of direct PE investment by sovereign entities.
About 5-10% of the recently closed secondaries fund is likely to be invested in Asia, given that “investors tend to hold on to Asian investments longer”, leading to relatively fewer secondary deal opportunities when compared with Europe or North America.
In the background to Axa PE’s assertive fundraising and deal activity, however, are reports that the unit has been put up for sale, as its parent company seeks to focus on its core insurance business.
Potential suitors are said to include sovereign fund Government of Singapore Investment Corporation, Canadian pension fund Caisse de Depot et Placement du Quebec, and private equity giants KKR and BlackRock.
While Axa would not comment on the reports, Han says it is business as usual for the PE unit. “From the team’s perspective, regardless of what happens, we are committed to what we’re doing. We see great opportunities and have strong investors behind us.”