Axa's Senequier Prepares to Go Shopping

Dominique Senequier is a woman holding a top job in a male-dominated business. She's built one of Europe's largest private equity firms in France, a country more famous for fashion than finance. What really sets her apart, though, is her conviction that now is the moment to invest in Europe. "Thanks to the attacks on the euro, the lower currency will stimulate growth," says Senequier, who oversees $25 billion as chief executive of the buyout unit at Axa, France's biggest insurer. "It's a heaven-sent opportunity."

Senequier, 56, has earned the right to be contrarian. Axa Private Equity, which she started 14 years ago, has delivered some of the industry's best returns, purchasing midsize European companies and stakes in U.S. leveraged buyout funds run by Blackstone Group (BX), Carlyle Group, and Kohlberg Kravis Roberts. "Dominique is an independent thinker," says Blackstone Chairman Stephen A. Schwarzman, who sees her when he's in Paris about twice a year. "She's very smart, an excellent investor, and she has a very good view of economic trends."

After going 18 months without making any major investments, in April Senequier bought stakes in LBO funds from Bank of America (BAC) valued at $1.9 billion, the largest transaction to date on the so-called secondary market, where investors trade private equity holdings. In Europe she purchased travel reservation website GO-Voyages from France's richest man, Bernard Arnault. And she is competing for deals ranging from a German specialty valve maker to the European liquefied petroleum gas unit of Royal Dutch Shell (RSDA).

Senequier landed at Axa after what she calls the biggest career setback of her life. In 1995 she was the head of French insurer GAN's private equity business, which she had started a decade earlier. The insurer was forced to sell assets as part of a government bailout. Backed by two private equity firms, Senequier bid for the unit. When GAN sold it to a rival bidder, she was forced to leave.

Fifteen years later, she still fumes about the sale. She was "betrayed by almost everybody," she says, sitting in her office overlooking the Ritz Hotel on the Place Vendôme in Paris. The setback was temporary. Senequier, who in 1972 became one of the first seven women to enter France's top engineering school, Ecole Polytechnique, turned for advice to a fellow alum, Claude Bébéar, CEO of Axa. Known in the press as "The Godfather of French Capitalism," Bébéar hired Senequier to start a private equity business for Axa.

Senequier saw it as a short-term job. "I had this idea of retiring after this first fund, or at least slowing down," she says. But the new perch gave her a fascinating window on global economic trends and money flows, "and here I am," she says.

Today, Senequier oversees 232 employees running about 50 active funds. The firm, she says, has $5 billion left to spend. She may start raising an additional $3 billion to buy stakes on the secondary market, having invested most of the current $2.9 billion secondary-market fund, people with knowledge of the matter say. She is also raising $1.9 billion for infrastructure investments. Senequier declined to comment on fund-raising.

Her track record should make it easy for her to attract money. Axa's first two LBO funds netted returns of more than 30 percent annually, placing them in the top 25 percent of their category, according to research firm Preqin. Axa LBO III, raised in 2005, has earned 12.3 percent, above the industry's average. A secondary-market fund launched in 2004 returned 50 percent a year, making it the top performer among all funds started that year, according to Preqin.

Axa Private Equity was ranked first, ahead of TPG, Carlyle, and KKR, as the firm "best positioned for long-term performance" in an April study by the HEC School of Management in Paris. Among Axa's strengths are its skill at playing macroeconomic cycles and timing acquisitions and exits, according to Oliver Gottschalg, HEC finance teacher and author of the study.

Discipline has helped, too. Throughout the LBO boom, Senequier stuck to what her direct investment teams did best: targeting midsize European companies such as Diana Ingredients, a French pet food ingredient maker, and German shopping broadcaster HSE 24. "Senequier has gained international recognition in a way no other French private equity executive has," says Eric Meyer, senior Société Générale banker in Paris advising buyout firms. "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."

Not that her record is spotless. Senequier got burned when she wandered into some giant buyout deals. Axa's co-investment fund bought minority stakes in Texas utility Energy Future Holdings, which was taken private by KKR and TPG for $43 billion in 2007, and payment-processing company First Data, 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.

Senequier, a passionate pianist who goes to Venice and Salzburg to listen to opera, spends 240 days a year in Asia and North America raising money. She says that in her business, being French is more of a handicap than being a woman, because her country is not known for its private equity industry. "Our investors don't understand that we can be French and succeed," she says. "I tell them being a minority forces us to be more open to other cultures and forces us to be modest."

Her mission now, she says, is to persuade people to invest in Europe. As she sees it, European governments, led by Germany, are making structural reforms to deal with long-term budget problems, laying a foundation for growth. They are also cutting spending to tame deficits, so they won't have the capital to fund infrastructure projects at home or in neighboring countries. That will open the door for private investors and sovereign wealth funds from developing nations with budget surpluses, particularly China. "We'll have to try to capture this flow, and this will be possible only if we show our willingness to invest" in those countries, too, she says. "It has to be a win-win game."

The bottom line: A woman working far from Wall Street, Senequier has built a private equity empire that will grow bigger if her bet on Europe pays off.

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