Europe's Private Equity Queen Readies Axa for Shopping Spree
Axa Private Equity CEO Dominique Senequier gestures while speaking during an interview in Paris. Photographer: Antoine Antoniol/Bloomberg
Dominique Senequier is different.
It’s not because she’s a woman who built one of Europe’s largest private equity firms from France, a country more famous for fashion than for finance. Rather, it’s because she’s convinced now is the moment to invest in Europe.
“Thanks to the attacks on the euro, the lower currency will stimulate growth and Angela Merkel has become the leader of a pan-European budget-tightening plan,” the chief executive officer of Axa SA’s buyout unit said in an interview in her office, overlooking the Ritz hotel across from the 18th century Place Vendome in Paris. “It’s a heaven-sent opportunity,” she said with a smile.
Senequier, 56, 5-feet-2 and $25 billion under her watch, isn’t afraid to sound contrarian just as European Union governments struggle to cut record budget deficits, making investors flee the currency. Every year, Axa Private Equity, which she started 14 years ago, has been delivering some of the industry’s best returns, purchasing mid-sized European companies and stakes in U.S. leveraged buyout funds run by KKR & Co., Blackstone Group LP and the Carlyle Group. Now, as the private equity industry emerges from the worst crisis in decades, she is embarking on a shopping spree.
In April, Senequier bought $1.9 billion of stakes in mostly American LBO funds from Bank of America Corp., the largest acquisition of its kind. In Europe, she purchased travel reservation website GO-Voyages from Belgian financier Albert Frere and France’s richest man, Bernard Arnault. She is taking over companies in three Natixis SA funds for 534 million euros ($676 million) and competing for deals ranging from German specialty valves maker Phonix Armaturen-Werke Bregel GmbH to the European liquefied petroleum gas unit of Royal Dutch Shell Plc.
Global Network
Senequier, on the road 240 days a year to raise funds in North America and Asia, has built Axa Private Equity’s international influence while operating from a country with no significant pension funds and little private equity tradition. Distancing herself from the highly political French business world, she’s succeeded by building a global network in the male- dominated buyout community that includes Blackstone Chief Stephen Schwarzman, TPG Inc. founder David Bonderman and KKR co- founder Henry Roberts Kravis. Her returns have made her a money magnet, boosting assets under management more than 10-fold over the last decade.
“Dominique is an independent thinker,” Schwarzman, who sees her when he’s in Paris about twice a year, said in a phone interview from New York. “She’s very smart, an excellent investor and she has a very good view of economic trends.”
Early Setback
It began in 1995 with what she calls the biggest career setback of her life.
Senequier, one of the first seven women to graduate from France’s top engineering school, Ecole Polytechnique, was then the head of French insurer GAN’s private equity business, which she started a decade earlier. The insurer was forced to sell assets as part of a government bailout. Senequier bid for the unit with the backing of London-based firm Electra Fleming. Instead, GAN sold the unit to the former Financiere Saint Dominique, now part of Natixis, and she was forced to leave.
Even now, Senequier fumes about the sale process, saying she was “betrayed by almost everybody,” including GAN Chairman Jean-Jacques Bonnaud, whom she says promised to support her bid, and Banexi, the investment bank of former BNP SA, which dropped her bidding group to join the eventual winner. It was then, she said, that she realized French business was all about who had political weight. And that she had none.
Learning the Game
“I didn’t know how to spell the word politics,” recalled Senequier, wearing a black suit and a white-stoned pendant as her only jewellery. “I thought being legitimate would be enough. I lost 95 percent of my naivety.”
Pascal Henisse, a spokesman for BNP Paribas SA, declined to comment. Bonnaud didn’t return calls nor respond to e-mails seeking comment.
Senequier, the daughter of a marine engineer who was born in Toulon, southern France, said she learned to play the political game. She sought advice from Axa Chief Executive Officer Claude Bebear, also a Polytechnique graduate, who hired her to start Axa’s private equity unit. Known as “the godfather of French capitalism” in the French press, Bebear promised Axa would match a third of what she raised from other investors.
She immediately turned overseas for funds, convincing Caisse de Depot du Quebec, Canada’s largest pension fund manager, to commit about 30 million euros for her first 95 million euro LBO fund. Dutch bank Rabobank Groep pledged the same.
The Axa Connection
“I had this idea of retiring after this first fund, or slowing down,” said Senequier, who says she believes in living day to day, not focusing on big plans. She burst into laughter.
The Axa name helped in her quest for funds and the insurer’s acquisitions planted the seeds for new private equity businesses. The takeover of France’s Union des Assurances de Paris SA in 1997, for example, brought a 150 million-euro portfolio of funds of funds. Senequier raised 300 million euros to match with Bebear’s money and turned it into one of the best- performing units of its kind. Its so-called secondary fund raised in 2004, which buys second-hand stakes in buyout funds from investors who want to offload commitments, yielded 50 percent a year net of fees and carried interest, the world’s highest rate of return recorded for that vintage year, said London-based research firm Preqin Ltd.
50 Active Funds
Axa’s 50 active funds invest in buyout funds, infrastructure, mezzanine, venture capital, small, mid-sized companies and have minority stakes in large LBOs. In Europe, Axa Private Equity ranks among the largest firms raising money from others in terms of assets under management, neck and neck with London firms Pantheon Ventures Ltd., which manages about $22.6 billion of funds of funds, and compares with Permira Advisers Ltd., which has raised 20 billion euros for LBOs. London buyout fund manager Apax Partners LLP says it has more than $35 billion under management. As a comparison, Blackstone, based in New York, says it manages $25.2 billion of fee-earning assets in its private equity unit.
“Dominique has been a visionary about the private equity industry in Europe and through her leadership Axa Private Equity has become a driving force,” Henry Kravis said in an e-mail responding to questions.
The $5 billion the firm has left to spend is drying up quickly, Senequier said. She is targeting 1.5 billion euros for its next infrastructure fund, and may start raising another $3 billion secondary fund after investing most of its current $2.9 billion one, people with knowledge of the matter said. Senequier declined to comment on fundraising.
Audacious and Cautious
“Axa Private Equity is really Dominique’s baby,” said Bebear, 74, now Axa’s honorary chairman, who says he was impressed by the “sharp woman who’s not afraid to speak her mind” when he met her about 20 years ago.
“What strikes me is her ability to be audacious while remaining cautious,” he said. “She kept away from the leverage craziness, for example.”
Senequier, who’s a passionate pianist and goes to Venice and Salzburg, Austria, to listen to opera, could have been tempted to raise a multibillion LBO fund during the boom years. She didn’t, instead sticking to what her direct investment teams did best: targeting mid-sized European companies such as French pet food ingredient maker Diana Ingredients SA or German shopping broadcaster HSE 24.
“We’re pretty slow and conservative people here,” Senequier said. “I didn’t want to concentrate all our efforts and resources on a mega-buyout team, when most of the best teams in that field already exist in the U.S.”
‘Best Positioned’
Axa’s first two LBO funds netted more than 30 percent annually, placing them in the top 25 percent best-performing funds in their category, according to Preqin. Axa LBO III, raised in 2005, has made more than 10 percent, above average.
The firm, which is 100 percent owned by Axa and employs 232 people, was ranked first ahead of TPG, Carlyle and KKR among the world’s top firms “best positioned for long-term performance” in an April study by the HEC School of Management in Paris. One of the main factors for the ranking was Axa’s ability to play macroeconomics cycles and time acquisitions and exits, said Oliver Gottschalg, an associate professor of strategy at HEC and author of the study.
“Senequier has gained international recognition in a way no other French private equity executive has,” said Eric Meyer, senior banker advising buyout firms at Societe Generale SA in Paris. “At home in Europe, she kept away from the frenzy during the boom years and is now very active when others are still grappling with their legacy problems.”
Key Departures
Not everything has worked out.
Eighteen months with very few deals has been difficult for some of her dealmakers. The firm lost three managing directors in its star secondary unit: Daniel Benin and Stephane Chevrier in New York last year and Barthelemy de Beaupuy in Paris left partly because they disagreed with Senequier’s decision to delay investments, according to two people with knowledge of the matter. None of three could be reached for comment.
This may not help fundraising just as competitors such as New York-based Lexington Partners Inc. are also coming back to investors, Jeremie Le Febvre, partner at placement agent Triago SA, said.
“There’s nearly $100 billion of dry powder waiting to be spent in the secondary markets by specialist funds and institutional investors,” he said. “Fundraising is going to be challenging.”
Mixed Results
Senequier also had mixed results when she wandered occasionally into some of the giant buyout deals. Axa’s “co- investment” fund bought minority stakes in Texas utility Energy Future Holdings Corp., which was taken private by KKR and TPG for $43 billion in 2007, and payment-processing company First Data Corp., acquired by KKR for $27.5 billion in 2007. The value of those investments has been marked down in the wake of the credit crisis. The firm’s first co-investment fund, raised in 2005 and which also includes stakes in KKR’s Alliance Boots Holdings Ltd. and PAI Partners’ Chr. Hansen Holding A/S, is almost at cost.
Through the years, the love-hate relationship with her home country has continued, she said. Her dominant position at home has made Axa a natural partner for the U.S. buyout firms in France, a nation not always welcoming to foreign investors. That advantage is more than offset, Senequier said, by the provincialism of French capitalism.
“She belongs to Axa,” Bebear said.
‘Heavy Burden’
Axa’s French roots are a “heavy burden,” said Senequier, who points to the country’s lack of financial culture at the highest levels of the administration. Being French has been harder than being a woman in this world, she said.
“Our investors don’t understand that we can be French and succeed in this industry,” she said. “I tell them being a minority forces us to be more open to other cultures and forces us to be modest.”
Her job now, she says, is to convince her investors Europe is the place to be.
A lower euro will boost exports and stimulate internal economic growth, while European countries will tackle their deficits and implement reforms for real this time, she said. European governments won’t be able to fund infrastructure projects, creating opportunities for emerging markets investors.
“The gap between indebted countries and those with surpluses is widening,” Senequier said. “This will influence private equity massively in the next decade.”
Emerging Markets
Greece, she said, is playing this trend “beautifully.” “While European governments are grappling with their own budget issues, they are tempted to seek the help of the Libyans, the Qataris or China,” she said. “These investors will help fund infrastructures and create jobs.”
The money will mostly come from emerging markets and their sovereign wealth funds, particularly China, Senequier said. Those countries are no ordinary investors, though.
“We’ll have to try to capture this flow, and this will be possible only if we show our willingness to invest in those regions, too,” she said. “It has to be a win-win game.”
To contact the reporter on this story: Anne-Sylvaine Chassany in Paris at achassany@bloomberg.net
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