AXA IM Alts Raises $2.5 Billion for Bank Risk Transfer Trades

French insurer AXA's alternative investment arm, AXA IM Alts, secures $2.5 billion to capitalize on opportunities in the bank risk transfer market.

AXA IM Alts, the alternative investment arm of French insurer AXA, has successfully raised $2.5 billion to target opportunities in the burgeoning market for bank risk transfers. This significant capital infusion will enable the company to pursue deals in this rapidly growing sector, as more financial institutions seek to leverage investor interest in their loan portfolios.

The funding was provided by a total of 46 investors, with $1.3 billion raised for the Partner Capital Solutions 9 Fund and an additional $1.2 billion from parallel separate managed accounts. Notable contributors include large Danish pension funds and the Arizona State Retirement System, underscoring the broad appeal of AXA IM Alts' investment strategy.

In recent years, an increasing number of global banks have turned to privately-negotiated Significant Risk Transfer (SRT) transactions to manage regulatory capital requirements. By transferring the risk of loan losses to investors, banks can free up capital on their balance sheets, allowing them to reallocate these funds to other areas such as new lending initiatives or shareholder dividends.

SRTs offer investors the opportunity to access stable cash flows from performing loans, often at attractive spreads. This can help diversify their investment portfolios and provide a source of consistent returns in a challenging market environment. The European market has been a pioneer in SRT issuance, with North American lenders now following suit, particularly after the Federal Reserve clarified the conditions for capital relief in such transactions.

Investor demand for private debt opportunities through SRTs is expected to continue growing, as these instruments provide access to assets that may be otherwise difficult to obtain in direct lending markets. While the Partner Capital Solutions 9 Fund will focus on performing loan assets, other market participants are exploring opportunities in the non-performing loan space, highlighting the evolving nature of this market segment.

AXA IM Alts has a strong track record in the alternative credit space, having executed 110 SRT deals with banks since the launch of its Alternative Credit platform in 2000. With approximately $198 billion in total assets under management, the company now oversees more than 58 billion euros in alternative credit assets, solidifying its position as a key player in the industry.

The successful fundraising by AXA IM Alts underscores the growing interest in bank risk transfers as a strategic tool for financial institutions to optimize their balance sheets and unlock new opportunities for investors. With a strong foundation and a proven track record, the company is well-positioned to capitalize on the expanding market for SRT transactions.