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Ardian has raised the largest fund for buying stakes in ageing private equity funds and signalled it would be open to acquisitions as it increases its US business.
The French alternative asset manager, which specialises in so-called secondaries transactions that allow investors to offload unwanted stakes in funds, started fundraising for the $30bn vehicle in 2022.
Ardian, which has $176bn in assets under management or advice, closed the fund at a total that was $11bn higher than its previous secondaries fund secured in 2020.
The successful fundraise marks the latest sign that the market for second-hand private equity stakes is booming, as buyout funds struggle to cash out investments and their investors — known as limited partners — seek alternative ways to get their money back early.
“Liquidity having been slower for LPs, that brought a lot of first-time sellers to the market,” Vladimir Colas, Ardian’s executive vice-president, told the Financial Times. “We estimate that [for] the last two years, around half of the sellers were first-time sellers.”
He estimated the volume of secondaries would reach a record $150bn for 2024, echoing similar predictions from investment bankers. Such transactions include fund investors selling on their stakes, and private equity groups seeking new investors in order to keep hold of assets in so-called continuation vehicles.
But Colas, who along with Mark Benedetti is part of a new generation of management at the firm founded by Dominique Senequier, added that more than $250bn worth of assets had been put up for sale — suggesting there was more supply than buyers could absorb.
Investors in private equity, many of which are institutions such as public pension funds, found they had breached caps on their exposure to the asset class in 2022, said Benedetti, Ardian’s executive president.
A sell-off in public markets reduced the percentage of their holdings in equities and fixed income, increasing the proportion of the investors’ portfolios that was allocated to private equity as a result.
Some investors have since slashed their holdings, driving the increase in secondaries deals.
Ardian’s new secondaries fund has deployed half of the money raised, purchasing buyout fund stakes in 17 transactions averaging $2bn in size.
Benedetti said: “We’re on our second deal with the same seller, which is incredible, and both times they sold because they were over-allocated and they’re still over-allocated after the second sale.”
He suggested Ardian was open to making acquisitions of other firms, as consolidation sweeps the private capital industry.
“We are not present in the US large-cap buyout, we’re not present in US private debt and we’re not present in US real estate. So those would be obvious ponds to fish from,” he said, referring to making primary investments in those strategies, rather than secondaries.
But he added nothing the firm had looked at had “been the right fit” and Ardian would take its time because “we’re not in a hurry to make a mistake”.
Benedetti also said he believed Donald Trump would support opening up retirement funds to private equity, as the industry prepares a mammoth lobbying effort aimed at the incoming US president.
“Long term, especially within Trump’s presidency, he’s going to be definitely more of a proponent than . . . an adversary when it comes to democratisation of private markets,” he said.
Benedetti said Ardian was now seeing double the amount of underlying companies in its portfolio being put up for sale than nine months ago, because the election had solved a “big unknown” — namely who the next president would be.
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