* BlackRock to acquire $7.5 bln asset business
* Deal follows HarbourVest acquisition of Conversus assets
* Financial institutions divest private equity assets
* AXA PE to buy $850 mln in private equity assets from OMERS
By Simon Meads and Emma Thomasson
LONDON/ZURICH, July 3 U.S. investment manager
BlackRock is buying Swiss Re's European
private equity arm, marking the second deal for a private equity
fund manager in as many days as sellers contend with a new
regulatory landscape and tough trading.
Swiss Re's deal to sell its $7.5 billion private equity and
infrastructure fund of funds business follows hot on the heels
of HarbourVest Partners' agreement to buy Amsterdam-listed
private equity fund of funds business Conversus Capital
And a further deal on Tuesday, by AXA Private Equity for an
$850 million portfolio of assets from Canadian pension fund
OMERS, points to an industry in flux, with some private equity
investors cutting back and others consolidating their positions.
Both Swiss Re's private equity business and Conversus invest
in private equity funds from firms such as Blackstone,
CVC and KKR, which in turn plough that capital
into companies via leveraged buyouts and minority investments.
Insurers and other financial institutions are streamlining
their businesses and reducing exposure to private equity in the
face of new regulations that will make risky assets more
expensive and so less profitable to hold.
Meanwhile, specialist fund managers are taking advantage of
tough trading conditions and the discounts at which assets trade
to pick off weaker rivals and build up their fund of funds
BlackRock said the terms of the all-cash deal were not being
disclosed. It expects the deal to be completed by the end of the
third quarter and be at best modestly accretive to its 2012
The deal sees Swiss Re Private Equity Partners (SRPEP) AG
outsource the management of its investments to BlackRock Private
Equity Partners (BRPEP), an arm of its Alternative Investors
division, which had $110.4 billion in assets at end-March.
Other asset managers have sought to benefit from the
industry shake-up and the booming market for trading of private
AXA Private Equity, the private equity arm of AXA insurance
group, this month raised a $7.1 billion fund to buy
private equity investment portfolios from banks and other
Swiss Re said in a separate statement it would continue to
hold the underlying investments in SRPEP and plans further
private equity investments, mainly through this platform.
A spokesman said 50 staff based in Zurich, New York and
Bratislava would be transferred to BlackRock under the deal.
Swiss Re launched its private equity business in 1995 and
opened it to co-investors in 2002. It sold the platform to Swiss
private investment office Horizon21 in 2006, only to bring it
back again to Swiss Re in 2010.
The transaction will have no material impact on the earnings
estimates for Swiss Re, said Sarasin analyst Martin Schwab.
"Nevertheless, we regard the outsourcing as expedient as it
allows Swiss Re to further focus on its core business," Schwab
Swiss Re shares closed up 1.66 percent, compared with a 1
percent firmer European insurance sector.
BRPEP head Russell Steenberg will lead the combined unit,
while SRPEP chief executive Christian Hinze will join BlackRock
as deputy head of the combined business.