Axxes Capital, a private markets investment firm, has launched Axxes Direct, a platform to connect accredited investors and qualified purchasers with co-investments in the private markets.
The Coral Gables, Fla.-based Axxes said it sees opportunities in the secondhand market as oftentimes private investments are only made available to large institutional investors and ultra-high net worth family offices.The firm wants to make them accessible to other investors.
“We’re really focused on that portion of the QP [qualified purchaser] market that’s really been disenfranchised,” said Joseph DaGrosa, chairman and CEO of Axxes.
Tapped to lead Axxes Direct will be Ari Bass, a long-time friend of DaGrosa’s with more than 25 years experience. He co-founded BP Partners Management, a Los Angeles-based private equity and multifamily office investment firm. He also served as investment committee chair and managing director for private equity firm Lotus Domaine Management and its Lotus Domaine Fund III. He has also worked for Chanin Capital Partners, Deloitte & Touche, and T. Rowe Price, according to Axxes.
The firm is targeting investors with $5 million to $100 million in assets, which is a client segment that has been shut out of preferred deals,according to DaGrosa.
Axxes Direct will provide qualified purchasers access to those deals through multiple co-investment opportunities, including continuation funds, acquisition co-investments and equity recapitalizations, DaGrosa said.
The firm is also addressing some of the disadvantages in private investments, including a lack of transparency, he said. In a co-investment arrangement, the sponsor of the fund will have conducted background checks and proper due diligence.
“We have generally full visibility with respect to the due diligence that the sponsor is undertaking for the acquisition,” DaGrosa said. “So instead of it being a blind investment, you know exactly what we’re investing in.”
Axxes Direct also seeks to ensure that an investor’s money starts to work right away since they are joining an investment further along in the process, and that the initial investment is used immediately, he said.
“So that money is being put to work right away in a specific company and we own it within two weeks of closing it,” DaGrosa said. “As opposed to where you make a $1 million commitment and you’re just waiting for the capital to be called, meanwhile you’re paying management fees.”
Axxes Direct will use continuation funds as an option to get clients into private investments. The vehicles allow sponsors to maintain their hold of an asset by transferring them into another vehicle after the fund itself must close, according to DaGrosa.
“Continuation funds are an important management tool for private equity firms, benefiting a broad array of investors and capital markets participants,” he said. “With almost $3 trillion in unmonetized private equity assets, the opportunity to invest alongside some of the largest and most sophisticated managers has never been greater.”
Axxes Capital, which officially launched in late 2021, is in the process of launching several of its own funds, including the Axxes Private Market Fund, which is a co-investment vehicle. It is currently going through the approval process and should be available by the end of the year, DaGrosa said.
The firm will also file for an opportunistic credit vehicle and a direct lending vehicle next month, he added.
In the meantime, DaGrosa is optimistic that his firm can tap into an investment group that has been disenfranchised while investing into a market with significant potential.
“The supply demand imbalance is such is that it is a great time for investors so there are a lot more deals than there are potential co-investors,” he said. “So, we’re really in a position to cherry-pick some very good deals and we’re not facing a lot of competition right now.”