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Advent raises €6.6bn

The global mid-market buyout firm attracted interest nearly double its planned €5bn target, but it scaled back the fund giving existing limited partners priority.

Global mid-market buyout firm Advent International has raised a €6.6 billion ($10.4 billion) fund, exceeding its target of €5 billion, according to Bruce Barclay, managing director of Advent International.

Advent held its first close on €5.5 billion in March this year having set out on the fundraising trail in November.

The changing market conditions have thrust mid-market firms into the spotlight, and Advent differentiates itself from many of its competitors because it argues most of its returns are driven by EBITDA growth. Barclay said 81 percent of the returns its 2001 fund had made, came from increasing profits. “I think this puts us in the top decile of funds making our money this way.”

Advent had interest from more than €10 billion worth of investors, but the fund was scaled back, with existing limited partners given priority. The fund size had been restricted because the firm believed it would be difficult to invest a larger amount in the mid-market in present market conditions.

“We were very comfortable at the fund size matching our current view of the opportunity available and our ability to exploit it.” 

Investments in the fund were allocated to two thirds existing investors and one thirds new investors. Its investors included Canadian pension fund Canada Pension Plan Investment Board, Singaporean sovereign fund GIC Special Investments, Dutch investor AlpInvest Partners, global investment firm Pantheon, US pension fund California State Teachers’ Retirement System, UK financial services firm Standard Life’s listed fund of funds SL Capital Partners, and Swiss fund of funds Partners Group.

Advent has raised more than $23 billion (€14.6 billion) in private equity capital and completed more than 200 transactions valued at more than $36 billion in 35 countries.
It is targetting investments with enterprise values of €200 million to €1 billion with the ability to do larger deals. The fund is expected to make 30 to 35 investments.

The firm raised €2.5 billion for its previous global buyout fund in 2005. Advent said the fund is the largest mid-market buyout fund ever raised. Other mid-market firms such as Candover and Charterhouse Capital Partners are presently understood to be in the market fundraising and their efforts may well surpass the size of Advent’s present fund.

Despite worries about private equity firms following the credit crunch, there has been a buoyant market for fundraising. This has not only been dominated by mid-market firms like Advent, but also by the mega buyout firms which are having difficulties investing their funds in present market conditions.

Last month PEO exclusively reported that US buyout firm Kohlberg Kravis Roberts had raised $17.6 billion. But an investor in the KKR fund confirmed a report by UK newspaper Financial Times that KKR had postponed an immediate follow-on fundraising, which had been planned to start immediately after the previous fund’s close.

The investor said given KKR had plenty of spare capacity to invest from its $17.6 billion fund the decision was simply a reflection of the changed market conditions following the credit crunch.