Terms of the deal were not disclosed, but Vincent Gombault, Axa Private Equity managing director for funds of funds, said the current environment suggested a single-digit percentage discount to the portfolio’s net asset value.
“The market today (for good-quality portfolios) is currently in the single-digit range... below 10 per cent to the NAV (net asset value),” Gombault said.
The transaction, involving about 60 funds, appears to be one of the biggest ever on the secondary private equity market by a single buyer.
The deal also suggests that fears of a crippling “wall of debt” due in the next few years are overdone, added Gombault. He expressed confidence that over 80 per cent of the assets involved would not face the kind of “difficulties” that would see lending banks take control.
Despite the impressive size of the deal, getting sizeable returns on these investments will depend on the future of the economic recovery as well as the price paid for the assets.