Henry Kravis's KKR and Co. is making its largest buyout bet when it weighs in on the purchase of AXA SA's private equity fund division. The US buyout firm is jockeying with Caisse de Depot et Placement du Quebec, the largest Canadian pension fund manager.

AXA is France's biggest insurer and the first round of bids would be coming in by March. The bid by KKR is clearly a means to diversify its portfolio from just leveraged buyouts but to increase its assets base to ensure consistent income for the firm.

AXA is currently managing US$28 billion and focuses on insurance. The private equity operation is valued at US$680 million according to internal estimates. The unit manages not only AXA assets but also other institutions such as pension funds and sovereign wealth funds. Other stakes include US and Euro buyout funds run by firms such as KKR, Blackstone Group LP and BC Partners Ltd as well as investments in midsized companies and European infrastructure projects.