Advent seals sevenfold return with Zong sale

Advent Venture Partners has booked a substantial return on its investment in payment processing business Zong following its sale to online auction house eBay for $240m.

Venture capital firm Advent Venture Partners has booked a 7.7x return on its £3.2 million investment in Zong, four years after it first backed the company. The investment’s internal rate of return was 61 percent, the firm said in a statement.

It is the firm’s third exit in recent months from its latest fund, Advent Private Equity Fund IV, following the sale of digital effects house The Foundry to The Carlyle Group in March and online video company Dailymotion’s sale to telecommunications group Orange in April.

To date, realised investments from the fund’s portfolio have generated more than six times the capital invested, while the fund overall has returned 1.5x to date, the firm said.

Advent backed a Swiss business, Echovox, in 2008, from which Zong was spun out in 2009.

Frédéric Court, a partner at Advent, said his firm helped to focus the business’ strategy, and also supported its expansion into the US market. “That turned out to be one of the best decisions we took – it worked out financially, but it also brought the company closer to a number of strategic players who were interested in acquiring the business, one of which was eBay,” Court said.

Advent has just finalised a £5 million growth capital investment in an unnamed e-commerce company, which is likely to be announced next week. The firm is understood to be eyeing one or two more investments using Fund IV capital before it considers raising a new pool of capital.