Ardian rakes in €7.5bn for its largest buyout fund

Ardian Buyout Fund VII is 67% larger than its 2016-vintage predecessor, including co-investment capital, and received commitments from more than 200 LPs.

Ardian has held a final close on its seventh buyout fund with total capital commitments of €7.5 billion, the largest it has raised for the strategy.

Paris-based Ardian collected €6.5 billion for Ardian Buyout Fund VII and an additional €1 billion for co-investments, according to a statement seen by Private Equity International. The total amount is 67 percent more than the €4.5 billion it raised for Fund VI, which also includes co-investments, in 2016. Fund VII had a target of €6 billion.

Fund VII garnered commitments from 221 institutional and private investors from 27 countries.

Nearly half, or 100, of Fund VII’s LPs are new to Ardian, Philippe Poletti, member of the executive committee and head of Ardian Buyout, told PEI. He added that the firm, which began raising capital in mid-2019, had already raised €4.5 billion by February last year, before countries imposed border restrictions due to the pandemic.

Fund VII received a re-up rate of 87 percent and saw significant interest from pension funds and high-net-worth investors, Poletti said.

Europe-based LPs make up 39 percent of Fund VII’s LP base, while North American LPs account for 23 percent, Middle-East-based LPs 22 percent and the remaining 16 percent are from Asia, Poletti added.

More than half of the capital raised came from about a quarter of Ardian’s previous LPs, the firm said in a statement.

Investors in the fund include New Jersey Division of Investment, which committed €175 million, and China Life Insurance, which committed €27 million, according to PEI data.

Terms for Fund VII remained broadly similar to its predecessor vehicles, according to Poletti, although he declined to provide details. Ardian’s GP commitment was 1.3 percent of Fund VII, a slight increase from its 1 percent GP commitment to Fund VI.

With a high re-up rate and significant interest for Fund VII as well as a healthy pipeline of investment opportunities, Ardian could seek as much as €8 billion for its successor buyout fund, Poletti said. He did not indicate a timeline for fundraising.

Similar to Ardian’s previous buyout vehicles, Fund VII will invest in companies with an enterprise value of between €500 million and €2 billion in core sectors healthcare, technology, services and the food-value chain. It will focus on buy-and-builds, sustainable buyouts and tech-enabled and digital solutions, according to the statement.

The majority of the fund is earmarked for deals in Europe and roughly 10 percent for investments in the US. The buyout team expects to complete up to three investments in the US from the fund, Poletti said.

Half of the capital raised for the vehicle has already been deployed across 11 investments, including Illinois-based specialty additives company Angus, Italian digital marketing company Jakala and French medical diagnostic company Inovie.

Poletti said the pandemic has highlighted the relevance of the firm’s global-local strategy with five investments made across the UK, France, the US and Portugal last year and various cross-border add-ons in 2021.

“Valuations will continue to be high in good deals, which is why the high quality of sourcing is essential,” Poletti said.

He added that the firm has benefitted from mainly proprietary deal processes over time, noting that it had been able to acquire some of its companies at lower EBITDA multiples and via pre-emptive processes. For example, Ardian paid 9.5x EBITDA for Inovie at a time when comparable companies had average multiples of between 12x and 13x, Poletti said.

Fund VII’s close follows a build-out of Ardian’s buyout team last year in which it named five new managing directors. Two were external hires – Scarlett Omar-Broca, previously from Goldman Sachs’ Merchant Banking Division, is MD in Paris; and Heiko Geissler, who joined from Montagu Private Equity, is MD in Frankfurt.