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Axa chief urges caution on Potash deal Add to ...

Normally, private equity investors are dead set against government intervention in the selling of corporate assets. But Dominique Senequier is different from most other investment managers. She is one of the few women to run a major private equity firm, she speaks publicly about the need for her industry to "embrace ethical principles," and she has instituted a best-practices policy of sharing the capital gains among all employees for the transactions in which her firm, Paris-based Axa Private Equity, is the majority shareholder.

Ms. Senequier, Axa's chief executive officer, has been working with Canadian investors since setting up her firm in 1996 and counts the giant pension fund Caisse de dépôt et placement du Québec as one of her oldest clients. Her knowledge of the Canadian business landscape has left her with a passionate stand on the proposed sale of Potash Corp. to Australia's BHP Billiton Ltd.: Ottawa needs to add some brakes to the foreign takeover vehicle that is charging through Canada's resource sector.

"Canada is certainly one of the most open markets in the world," she says in a telephone interview from Montreal. "There is no other country where you can make an offer and face no obstacles. And when you are unique in something, you have to ask yourself whether you are moving in the right direction. Sometimes you have to benchmark your policy."

With Potash Corp. in play, there is no better time for the federal government to start asking such questions, she says. It's not that she advocates building nationalistic obstacles for BHP and others, but she does think it wise for Canada to revise its rules so that Ottawa has the time and the right to review complicated takeover situations thoroughly. "A government needs time to ask the right questions," she says.

And it's not just nationalistic issues that are at stake. Because so much of the world relies on the company's potash to fertilize its crops, the Canadian government has a moral obligation to make sure any deal is beneficial to existing stakeholders, she adds.

Looking long term is vital

At the heart of Ms. Senequier's position on potash is the same sentiment at the core of her investing strategy. An emphasis on short-term profits is never good for companies, she says. "One of the pillars of good corporate governance to me is looking at long-term strategy."

Axa manages about $25-billion (U.S.) through a variety of vehicles that include leveraged buyout funds, venture capital pools, funds of funds and pure infrastructure investments. Axa's average holding period on an investment is five to 10 years, she says.

Last month, Forbes magazine named Ms. Senequier one the World's 100 Most Powerful Women, citing her achievement at building one of Europe's largest private equity firms and delivering some of the industry's best returns. The investment diva now finds herself in the same company as U.S. first lady Michelle Obama, Kraft Foods CEO Irene Rosenfeld and the 24-year-old U.S. entertainer Stefani Germanotta, better known as Lady Gaga.

One move that won Ms. Senequier the spotlight was her firm's decision to spend $1.9-billion last April to buy the investment portfolio of troubled Bank of America. The purchase fit Axa's strategy of pursuing high-quality assets at affordable prices.

The tumultuous events of the past few years have produced some huge opportunities for those with both business acumen and cash on hand. The global valuation of companies today remains one-third of what it was in the summer of 2007 before the subprime mortgage crisis struck, she says. Europe and North America are in a volatile recovery period that is difficult to define. On the one hand, there is a risk of deflation in sections of the economy comprising weak assets that have little market appeal. But there are also inflationary signs for high-quality assets. Infrastructure, prime real estate and some companies have seen prices rise. Highways and water and gas distribution infrastructure, for example, are prized today because their revenue will rise with inflation, she says.

One area for which Ms. Senequier has little respect today is the stock market. They have lost a lot of their transparency as traders with sophisticated models and complicated derivative products have taken over the lion's share of the game. "Public markets are too volatile," she says. "It's no longer about valuation. What does a stock exchange represent today? It's a big arbitrage market. It's a market for traders, where no one holds for more than six months."

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