Advent International smashed through its $12 billion target to close its eighth flagship vehicle on its $13 billion hard-cap in late March. The firm’s success, which came in just six months, is testament to investor loyalty and the flight to safety market participants say limited partners are making to insure themselves against any global economic downturn.
“We could have raised quite a bit more,” Advent’s New York-based co-head of limited partner services Bob Weaver tells Private Equity International. “Our investors were keen to have us not over-capitalise the fund. The last thing you want to have is people feel there is too much capital to invest. [$13 billion] is a number that we feel very comfortable with.”
Existing investors accounted for a hefty 90 percent of commitments to Advent International Global Private Equity VIII, which is about 20 percent larger than its predecessor. The fundraising benefited from the post-financial crisis desire of LPs to concentrate their relationships and “do more with fewer investors”, Weaver says.
It was able to hit its hard-cap with no first close and no performance hurdle. “We had closings on a weekly basis beginning in February and finalising in March,” Weaver says. “We essentially allocated the fund once and closed people over a 30 to 45-day period as they were prepared to execute signature pages.”
More than half of the capital came from North American investors, about 20 percent from Europeans and a similar amount from Asia-Pacific – slightly up from its previous vehicle. The remainder came from the rest of the world, including the Middle East and Latin America.
Weaver attributes the speed of the fundraising to “a bit of a running start with our existing LPs” that had made pre-marketing enquiries about fundraising plans and prepared early in the process.
He also makes a link between its size and its dollar-denomination, a step-change from Advent’s previously euro-denominated funds, although as in previous vehicles investors were invited to commit in either dollars or euros. “That is responsive to the fact that in Fund VII the majority of commitments came in US dollars.”
Investors were attracted by the firm’s track record. “There has been a strong bifurcation of the market where you have some fundraises that are going very well and some that are a bit longer in the market,” Advent’s London-based co-head of limited partner services Johanna Barr says. “In a world of uncertainty, we do bring to bear a lot of the operational resources and expertise that portfolio companies can use in the potential down cycle that might be coming, to still out-perform.”
Advent is first across the line of a clutch of managers that include Cinven, BC Partners and Apax Partners, which are all marketing sizeable funds.
“Where is your capital safest in private equity?” asks Sunaina Sinha, founder and managing partner of placement agent Cebile Capital. “With the large-cap buyouts, who are the largest and the most diversified, and you’re not more than a certain percentage of the LP base because you’re in a $9 billion fund alongside hundreds of other LPs, and they’re doing tonnes and tonnes of deals so they’ve got 20 partners or 30 partners. Your capital is safest there.”
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