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Advent defies fundraising headwinds to close world’s second-largest PE fund

Advent International Global Private Equity X found itself on LP 'priority lists' thanks to the strong performance of its predecessors, global co-head of LP services Robert Weaver told PEI.

Advent International has closed one of the largest-ever private equity funds in a fundraising environment that has been anything but easy.

The Boston-headquartered buyout manager hit the $25 billion hard-cap on Advent International Global Private Equity X after less than six months in market, according to a statement. This represents a 40 percent increase on the amount raised for its 2019-vintage predecessor.

The vehicle is understood to have around $26 billion to deploy, including the GP commitment. The news was first reported by The Wall Street Journal.

Along with Advent Tech II, which closed in December on $4 billion, the firm has collected more than $30 billion in the past 12 months, the statement said.

“We’re in the fortunate position where the returns have been such that many of our investors have got us on their priority list,” global co-head of LP services Robert Weaver told Private Equity International. “We targeted $23 billion, closed at the hard-cap of $25 billion and demand was in excess of that, so we feel great about the outcome.”

According to data from the California Public Employees’ Retirement System, Advent International GPE IX had generated a 129.2 percent net internal rate of return and a 3x investment multiple as of 30 September. Funds V, VI and VII were all marked at 2x or above.

Fundraising has generally been a challenge this year, as the strong performance of private equity pushed many LPs over their allocation limits and forced them to cut back on commitments – the numerator effect – just as a flood of managers returned to market.

Advent seems largely immune. Most of the commitments for Fund X came from existing investors, including a number of large US public pension funds, whose strict allocation targets make them prone to the numerator effect. Two-thirds of fundraising was done virtually.

Employees Retirement System of Texas, Los Angeles County Employees’ Retirement Association and Minnesota State Board of Investment are among those who re-upped with Advent, according to PEI data. Massachusetts Pension Reserves Investment Management Board committed $350 million.

Advent does more deals per fund than most large-cap buyout shops, targeting between 35 and 40 companies per vehicle. This allows “greater flexibility” in sizing deals and should make the step up in size with Advent X relatively easy, according to global co-head of LP services Johanna Barr.

“We’ll continue to write equity cheques as small as $100 [million] to $200 million up to around $2 billion,” Barr said. “On average we’ll do a few more deals on our own and not alongside another sponsor [compared with Fund IX]. From a deal type perspective, we don’t think we need to change too much to deploy the capital in a sensible way.”

Advent targets companies across North America, Europe and Asia-Pacific in the business & financial services, healthcare, industrials, technology and retail, consumer & leisure sectors. Industrials made up the largest proportion of GPE IX, which was 78 percent invested as of 31 January, according to documents prepared for Teachers’ Retirement System of Louisiana.

“We focus very much on the micro in our sectors and sub-sectors, trying to find really good opportunities on the back of certain underlying trends,” Barr added, noting that, while resilience to macro trends is a factor in deciding whether to invest, volatility will not impact Advent’s overall strategy.

Excluding funds raised by SoftBank and those that include domestic state capital, Advent GPE X is the second-largest private equity fund at least since the global financial crisis, according to PEI data. It is shaded by 2019-vintage Blackstone Capital Partners VIII, which collected $26.21 billion.