Private debt fund manager Ardian, which spun out from Paris-headquartered insurance company AXA over two years ago, is nearing a final close of €2 billion for a new direct lending platform, two people with knowledge of the situation said. The firm is aiming for a close on the initiative by the end of the summer, PDI can reveal.
AXA Private Debt Fund III has garnered commitments of around €1.5 billion so far, PDI understands, but the total capacity of its new platform is around €2 billion, including an investment from AXA and other managed accounts. The offering has appealed to and attracted investment from institutional investors, particularly insurance companies, a second source said.
Ardian declined to comment.
Ardian’s third private debt fund held a first close of €1.22 billion in early 2013, PDI previously reported. The private debt team arranged its first investment from the fund in October 2013 – a €275 million multicurrency unitranche financing facility for private equity firm Bridgepoint’s acquisition of oil and gas product supplier The Flexitallic Group from Eurazeo PME.
Olivier Berment, head of private debt and managing director at Ardian, hinted at the time that unitranche financing would feature heavily in the firm’s new investment strategy, commenting that the instrument had become the preferred solution for companies looking for a flexible way to finance future investments and enhance value creation.
Ardian entered the private debt market in 2005 and its first mezzanine fund raised €770 million. In 2010, the firm launched its second mezzanine fund and raised €1.5 billion. However, Ardian ended up seeking permission from investors to deploy much of the capital from the fund into unitranche, when it emerged mezzanine deals were not as abundant. Both agreed new lower return targets. With unitranche pricing at around Libor plus 7 percent at the time, “all in, target returns are between 8 and 10 percent”, Berment said during an interview with PDI in late 2013, compared to previous returns for mezzanine in the range of 15 to 20 percent including warrants.
In the fourth quarter of 2014, Ardian completed two unitranche financings, according to Altium’s MidCap Monitor. In December, the firm provided a €92 million financing to private equity firm Qualium Investissement in its acquisition of IMV Technologies and also financing to private equity group Equistone in its acquisition of The Handmade Cake Company.
Ardian’s 11-strong private debt team based in Paris and London has invested €2.3 billion since 2005 and manages and advises on $4 billion of assets overall, according to its website. The firm arranges financings of between €40 million and €300 million under leveraged buyouts, OBO, management shareholding restructuring, recapitalisation or financing build-up. Founded in 1996, Ardian focuses on private equity investment and asset management, managing and advising on $50 billion of assets in Europe, North America and Asia. The group oversees a number of investment strategies including funds of funds, private debt, direct funds including expansion, mid-cap buyout, co-investment and infrastructure financing and has 340 staff based in offices in Beijing, Frankfurt, London, Luxembourg, Milan, New York, Paris, Singapore, Jersey and Zurich.