French firm AXA Private Equity has provided further evidence of the growing popularity of the secondaries market with the news that it has closed its second specialist fund well ahead of target on $480m.
The fund will invest in deals values between $1m and $100m.
AXA said it had attracted significant investments from a number of large institutional investors, including Bombardier Pension Funds, and the Caisse de Depot et Placement du Quebec.
Secondaries funds buy private equity investments from shareholders in primary funds, taking over the seller’s liabilities and their prospective returns in return for an agreed price.
The market has ballooned over the past few years, in line with the massive growth in the primary market. But the sharp downturn in the performance of many funds has given an even greater boost to the market by producing legions of distressed investors looking for a way out of their commitments.
AXA’s first secondaries fund was raised in 1998 with $220m and is now fully invested.
A handful of large secondaries funds have been raised over the last year and more are in the pipeline to take advantage of the huge volume of supply on the market. Goldman Sachs, for example, has raised nearly $3bn since 1998 to invest in secondaries, while the market giant Lexington Partners is currently looking for $2.5bn.
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