Kevin Dowd March 23, 2016
Advent International has announced the close of its eighth flagship fund with $13 billion in committed capital, just six months after the vehicle hit the market. The massive fund is one of the largest in recent history—exceeded only by the $18 billion Blackstone Capital Partners VII out of all buyout funds raised since 2014—and it was still significantly oversubscribed. Managing partner James Brocklebank told the Financial News that the Boston-based firm saw more than $20 billion in interest during the fundraising process.
The raise continues a promising trend at Advent: to date, every one of its flagship funds has been larger than the last. But the firm also hopes it will mark the end of a very different trend. While looking at funds of such different vintages can be like comparing apples and oranges as it relates to their lifecycles, each of Advent’s three predecessor vehicles have resulted in decreasing returns for investors, as measured by TVPI and IRR.
Let’s take a closer look at some of the specific deals behind the firm’s numbers.
Advent pursues a diverse investment strategy, spreading its money across a range of sectors including business & financial services; healthcare; industrial; retail, consumer & leisure; and technology, media & telecom. That diversification is certainly reflected in the firm’s Fund VII, which has been invested in a dizzying array of companies. That includes the add-on of beauty retailer Nocibé, the acquisition of industrial manufacturer RGL Reservoir Management and the purchase of Hellenic Duty Free Shops.
As Advent has been able to raise increasingly large pools of financing, the firm has in turn used that capital to make a growing number of investments of greater and greater size. While the €2.5 billion Fund V made 21 buys, only two of which were for $500 million or more, the €8.5 billion Fund VII has already completed 38 deals, five of them above the $500 million mark, and still has billions left in dry powder. In theory, this progression should lead to decreased risk but also decreased potential for any one extraordinarily successful deal to skew overall return numbers—the latter a possible factor in Advent’s declining multiples over the past decade-plus.
Still, there’s still plenty of time for the firm’s more-recent funds to improve performance. And investors, the people who really matter, certainly don’t seem to be concerned. Limited partners tend to put their money where their mouths are, and $13 billion speaks loud and clear.