Advent sets post-Lehman fundraising record

Advent International has wrapped up fundraising for its latest global buyout vehicle, which came in at €8.5bn.

€8.5 billion is a lot of capital for a single fund in any era. But in the teeth of a global economic slump, and at a time when investors are becoming increasingly circumspect, it represents a significant achievement.

Advent International’s latest buyout fund, Advent International GPE VII, has garnered €8.5 billion ($10.8 billion) in commitments, the firm said in a statement.

It is, the firm claims, the biggest buyout fund raised since September 2008. It trumps other large funds raised this year from BC Partners (BC European Capital IX raised €6.68 billion) and EQT (EQT VI garnered €4.82 billion). However, The Blackstone Group closed its sixth fund on $16.2 billion early this year.

Apax Partners, which held a first close on €4.3 billion in March this year, could yet trump Advent’s record, however, if it meets its €9 billion target. 

Advent’s fund reached its hard cap, which the firm increased from €8 billion in October in response to investor demand.

Pre-marketing had begun in late December, with LPs warned to expect a new PPM in the first quarter. The official launch took place in March.

We're not a diversified alternative asset manager – we focus on private equity, which is what we've always done, and investors I think appreciate that focus

Bob Brown, Advent International

Almost 100 percent of existing Advent investors re-upped to the new fund, Bob Brown, an Advent managing director and head of limited partner services, told Private Equity International. The firm brought in select new investors that were “strategically important” to it, Brown said, helping Advent expand its LP base in North and South America, the Middle East, and Asia. All investors in the fund, regardless of size or the point at which they committed, were offered the same terms and fee structure, he added.

“The firm is managed and structured as a traditional private partnership with a singular focus on private equity,” Brown said. “We're not a diversified alternative asset manager – we focus on private equity, which is what we've always done, and investors I think appreciate that focus.”

The fundraising was handled exclusively by the firm's 12-strong in-house investor relations team, supported by its other professionals. Goodwin Procter handled the legal side of the fund formation.

There are more than 200 LPs in the fund, Brown said. According to PEI data, they include: the California Public Employees’ Retirement System; Los Angeles City Employees’ Retirement System; Washington State Investment Board; Pennsylvania State Employees’ Retirement System; Massachusetts Pension Reserves Investment Management Board; Minnesota Board of Investment; and the University of St. Thomas Endowment.

The split by investor type reflected industry-wide standards, Brown suggested, with the majority of commitments coming from public pension funds, followed by sovereign wealth funds and then other LP types.

Ralf Huep, a general manager at Advent, said that as with prior GPE funds, Fund VII had a flexible mandate and would allocate capital across a variety of deal types and sizes. Co-investment opportunities would be offered on a selective basis, the firm said.

Advent’s sixth fund, which closed in 2008 on €6.6 billion, was generating a total value multiple of 1.2x and a net internal rate of return of about 13 percent as of 31 March, according to performance information from the Washington State Investment Board.

Capital from the new fund has already been deployed, funding the firm’s acquisition of Serta & Simmons Bedding as well as investments in Danish IT business KMD and Cytec Industries’ coating resins business. Managing partner David Mussafer told PEI that the firm's investment pipeline looked very healthy. “We have a lot of flexibility due to our pan-Atlantic strategy,” he said. “Europe at the moment is presenting some very interesting opportunities. India and China are markets for the future – they will represent a smaller piece of the jigsaw as far as this fund is concerned,” he added.

The Advent team tasked with deploying the fund now numbers more than 100 investment professionals, the firm said. Advent is in the process of opening an office in Shanghai, increasing its global footprint to 17 countries.