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France’s Ardian group has raised more than $20 billion to buy stakes in private equity funds from investors, underscoring a corner of the financial sector grappling with a broader funding slump.
The Paris-based firm raised money for a secondary fund that takes profits from institutional investors who sometimes have to sell stakes in private equity funds early. Typically, buyout funds lock up investors’ funds for more than a decade.
Ardian, which manages a total of $150 billion, is aiming to raise $25 billion for its secondary fund, according to people familiar with the matter.
In a sign of the sovereign wealth fund’s increasingly ambitious plans, the Abu Dhabi Investment Authority (Adia) has agreed to invest $6 billion in the fund and co-invest in its deals, according to a person familiar with the matter.
Over the past decade, investors have increased allocations to illiquid private market assets, including buyout funds and real estate, in search of higher returns. The trend has fueled the growth of secondary funds, which offer institutions such as pension funds the opportunity to exit such investments early if needed.
They have gained further momentum over the past 12 months since the end of the U.S. equity bull market, which has forced some investors to sell their private market holdings, such as private equity funds, to help rebalance their portfolios.
The value of deals struck by secondary funds reached $105 billion last year, almost five times what it was more than a decade ago, according to investment bank Raymond James.
The booming secondary fund market has also prompted major U.S. private buyout groups such as Blackstone to set up secondary funds as they rush to capitalize on strategies to attract capital during a broader downturn in fundraising.
Earlier this year, Blackstone raised more than $22 billion for its secondary fund, the largest of its kind. By comparison, its flagship buyout fund had raised $15.5 billion as of the end of March.
While other so-called alternative strategies, including traditional private equity funds and infrastructure, declined, funds raised by secondary funds rose nearly 40% in the first quarter from a year earlier, according to PitchBook data.
Ardian is led by Dominique Senequier and has more than 1,000 employees in 16 offices. It has strong ties to powerful sovereign wealth funds such as Abu Dhabi’s Mubadala and Aditya.
Its latest secondary fund raised $19 billion in 2020. Ardian has since lost some of the top executives of the team working on such deals.
Ardian and Adia declined to comment.