Here’s a video from BusinessWeek featuring the first lady of European Private Equity, Dominique Senequier, CEO of AXA Private Equity discussing the current difficult conditions facing the industry. She offers good insight into the cyclicality of the business (including the tendency for weaker firms to drift), as well as the good prospects for 2009 and 2010 vintages in secondaries.
CDC (Caisse des Dépots et Consignations), which operates with the government backed initiative France Investissement, has received the added support of AXA Private Equity and Barclays Private Equity to go along with AGF Private Equity, Groupe Caisse d’Epargne, Natixis, Finama Private Equity and Société Générale Asset Management. Both AXA PE and Barclays PE will be contributing €30M each (AXA’s portion is going towards a new €50M fund-of-funds). Negotiations are ongoing to bring in another partner by the end of this year.
In this article from the Economist, Dominique Senequier, head of Axa Private Equity talks about the need for the industry to include all of a companies’ employees in the share of capital gained when a firm exits. Rather controversially, she’s gone as far as to suggest an amendment to France’s labour code to oblige private-equity firms to distribute 5% of the capital gains from firms they sell among all the employees. It’s been rightly pointed out though that this could create all sorts of legal problems with LPs. Makes for a good, quick read.
No, don’t worry. The two aren’t connected in any overt way. As I haven’t sent out many Club emails of late I thought I’d cover a couple of news items from the past few days. The first story of interest concerns AXA Private Equity’s CEO Dominique Senequier’s call for European private equity firms to draw up a voluntary code of conduct that would pay particular focus on how PE firm’s divvy up profits. There has been particular concern in Paris concerning possible legislative backlash over payouts resulting from Barclays Private Equity’s sale of Converteam for €2bn. It seems that €700m divided up amongst eight partners may be perceived as a bit gratuitous by some on the continent. While some readers may be shaking their heads and uttering “the markets have decided” one has to take a step back and understand that some of the benefits of liberal economics is met with skepticism and even outright loathing in certain circles here. While some may blame Catholic guilt, or a little too much égalité and fraternité, this is nonetheless an entrenched mindset that has to be considered when doing business here, and Madame Senequier’s reaction displays that she is fully aware of the perils of public opinion. Private Equity’s so called “Golden Years” created a well documented backlash towards the industry by unions and some politicians and Europe has proven especially susceptible given various historical and sociological reasons.
My own opinion is that any pan-European agreement beyond what has been stated in the Walker Report will be hard to come by. Transparency, even of the voluntary kind, is a tough sell with at least as many pros as cons. Private Equity is lucrative. It’s also a meritocracy. Both these facts can make for some interesting and difficult maneuvering for European buyout firms that find themselves confronted by unfriendly regulators.
All this being said brings me to the next story, that of the rogue trader himself: Mr. Jerôme Kerviel. The man who almost brought down SocGen and came damn close to costing thousands of his fellow Frenchmen (and women) their jobs will be starring in his own illustrated novel. At first I thought it was a joke, but unfortunately this guys 15 minutes of fame keep getting stretched out further and further. Available in September from FNAC. In French only.