Credit Agricole is selling one of its private equity units as it moves to reduce risk and strengthen its balance sheet.Lionel Bonaventure/AFP/Getty Images
Crédit Agricole is to sell its private equity business to Coller Capital as the French bank sheds assets to shore up capital.
The decision to sell Crédit Agricole Private Equity will reduce its risk-weighted assets by about €900-million ($1.22-billion), the bank said on Friday.
France's third-largest bank by market value this week announced €2.5-billion of writedowns and a deleveraging plan focused on its investment banking activities.
People close to the situation said the business had been valued at around €300-million.
London-based Coller Capital is one of the of the largest investors in second-hand private equity interests, a market that its founder Jeremy Coller has pioneered.
Coller buys everything from single fund investments to large baskets of stakes, and is raising its sixth secondary fund with a target of $5-billion (U.S.).
In Crédit Agricole Private Equity, it is buying a diversified private equity player that invests in small and medium-sized companies, venture capital, infrastructure and renewable energy.
Its investments include Vue Entertainment, the U.K. cinema chain and RAC, the roadside assistance provider.
The transaction comes as banks and insurance groups in Europe and the U.S. are shedding private equity management companies and portfolios.
In France, insurer Axa has put its Axa Private Equity arm up for sale. With $28-billion assets under management, it is one of the largest private equity groups in Europe.
Banks are also selling large portfolios they had built up during the credit bubble years, partly as a way of winning financing and deal advisory mandates from the buy-out groups they had invested in.
They are selling the assets to bolster their balance sheets and to prepare for the forthcoming Basel III reform package, which will impose tough liquidity and capital constraints on such investments.
In France, Crédit Agricole's rival Société Générale this year sold a €150-million portfolio of private equity fund investments, while BNP Paribas has recently appointed UBS to sell a more than $700-million basket of more than 50 private equity stakes.
People close to the sector say that a host of other private equity portfolios owned by European and U.S. banks are likely to come to the market next year.
"European banks have around €45-billion in private equity assets left on their balance sheets," said Andrew Sealey, managing partner at Campbell Lutyens, an adviser on portfolio sales.
This compares with $32.5-billion of unspent capital in the market for such second-hand private equity interests, according to recent estimates by UBS, the investment bank.
Crédit Agricole, originally founded to finance farmers, said it would continue to finance small and medium-sized enterprises through private equity vehicles owned by its regional bank network, and via a partner which specializes in agricultural businesses.
Crédit Agricole will also retain its Italian private equity business.
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