Citigroup sells private equity assets to AXA unit

Paris: Citigroup has agreed to sell a portfolio of private equity assets to AXA Private Equity for $1.7bn, Reuters reported on Wednesday. The French insurer said on Wednesday that this was the latest move by the United States bank to unload non-core assets.

For AXA Private Equity, the deal is part of a series of acquisitions of private equity investments originally owned by other investors, including the purchase of a $1.9bn portfolio from Bank of America in April 2010.

AXA and other funds who have been buying private equity portfolios on the secondary market are betting that such assets – which have begun to recover since the 2008 financial crisis – will appreciate further and that they can extract more value from them.

AXA Private Equity Chief Executive Officer, Mr. Dominique Senequier, said in a conference call that she expected further acquisition opportunities as US banks – which are restricted under the Dodd-Frank financial reform law to investing three per cent of their Tier 1 capital in private equity and hedge funds – further cut such holdings, now at an average level of eight per cent.

“We know that in the next four to five years, the secondary asset market will total over $30bn,” she said, adding that AXA had been in exclusive negotiations on the portfolio with Citigroup since April.

The Citigroup portfolio comprises 207 stakes in various buyout funds as well as some direct stakes in companies, AXA said, adding that Citi – which has been looking to focus on its core businesses – was financing the purchase.