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AXA's private equity spin-out slowed by French tax debate

March 22, 2013: 2:59 PM ET

Tax worries delayed spin-out of $31 billion investment group.


FORTUNE -- French insurance giant AXA Group today reached an agreement to spin out its $31 billion private equity unit, a whopping 18 months after originally putting the unit up for sale. Part of the delay apparently related to uncertainty over new tax schemes being proposed by French President Francois Hollande.

The entire deal values AXA Private Equity at €510 million, and includes both up-front and deferred payments. The group's senior management would hold a 40% stake in the newly-independent entity, while AXA would retain nearly a 27% position and continue to be a cornerstone investor in AXA Private Equity funds. The rest would be held by a group of institutions that include European family offices and a small French insurance company.

AXA Group originally hired Credit Suisse to explore strategic alternatives for its private equity unit in September 2011. Early suitors included Kohlberg Kravis Roberts & Co. (KKR), Onex Corp., the Caisse de Dépôt et Placement du Québec and the Government of Singapore Investment Corp. But none of them could get over the finish line, due to both pricing and structural issues.

Then the entire process came to a screeching halt.

AXA Private Equity spokesman Jérémie Delecourt says that this sort of spinout is particularly difficult given all the stakeholders, but that a major outside worry was French tax policy. "The tax situation turned out not to be a problem for this transaction, but for several months we weren't sure what would happen so we decided to stay quiet," he explains.

The agreement is still subject to several regulatory approvals, and isn't expected to close until late this year.

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Dan Primack
Dan Primack
Senior Editor, Fortune

Dan Primack joined Fortune.com in September 2010 to cover deals and dealmakers, from Wall Street to Sand Hill Road. Previously, Dan was an editor-at-large with Thomson Reuters, where he launched both peHUB.com and the peHUB Wire email service. In a past journalistic life, Dan ran a community paper in Roxbury, Massachusetts. He currently lives just outside of Boston.

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