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French group Ardian has amassed more than $20bn to buy stakes in private equity funds from investors, highlighting a corner of finance that is defying the broader slump in fundraising.
The Paris-based company has raised the money for a secondary fund that profits from institutional investors who sometimes have to sell stakes in private equity funds early. Typically, buyout funds lock up investors’ money for more than a decade.
According to people familiar with the matter, Ardian, which manages a total of $150bn, eventually aims to raise $25bn for its secondary fund.
The Abu Dhabi Investment Authority (Adia) has agreed to invest $6bn in the fund and through co-investment in its deals, according to a person familiar with the matter, a sign of the sovereign wealth fund’s increasingly ambitious plans.
Over the past decade investors increased their allocation to less liquid private market assets, including buyout funds and real estate, in the hunt for higher returns. The trend turbocharged the growth of secondary funds that offer the likes of pension funds the chance to exit such investments early if they need to.
They have gained further momentum over the past 12 months from the end of the bull market for US stocks, which has left some investors having to sell their holdings in private market assets, such as private equity funds, to help rebalance their portfolios.
Last year, the value of deals agreed by secondary funds reached $105bn, almost five times more than a decade ago, according to investment bank Raymond James.
The booming market for secondary funds has also led major US private buyout groups such as Blackstone to set them up, as they rush to capitalise on a strategy that is attracting money amid the wider downturn in fundraising.
Earlier this year, Blackstone raised more than $22bn for its secondary fund, the largest of its kind. By contrast, its flagship buyout fund had raised $15.5bn by the end of March.
Secondary funds raised almost 40 per cent more money in the first quarter compared with the year earlier period, according to PitchBook data, even as other so-called alternative strategies including traditional private equity funds and infrastructure all suffered declines.
Led by Dominique Senequier, Ardian has more than 1,000 staff and 16 offices. It enjoys close ties with powerful sovereign wealth funds including Abu Dhabi’s Mubadala and Adia.
Its most recent secondary fund raised $19bn in 2020. Since then, Ardian has lost some executives from the team responsible for these sorts of deals.
Ardian and Adia declined to comment.