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An appetite for Advent

UK venture capital manager, Advent Venture Partners has announced the final closing of its new venture fund, Advent Private Equity Fund III at GBP300 million, following a successful first close at the end of last year at GBP162 million.

At a time where many players are having difficulties fund raising, Advent Private Equity Fund III has raised the new fund in just five months. The fund will be targeting emerging growth companies, particularly in the information technology, communications and life sciences sectors, where the team has extensive experience.

Patrick Lee, an Advent partner, said that the fund is one the largest UK-based venture funds focused on the technology sector. He noted that many of the very large funds, such as Apax, are global funds that focus on buyouts, whereas if you are talking strictly venture capital, targeting technology in Europe, this is one of the bigger funds.

An encouraging aspect of the new fund is that half of total commitments have come from UK investors. These include a number of leading institutions such as the Abbey National, NatWest Pension fund, Shell UK Pension Fund, Pantheon Ventures and its clients, as well as the government sponsored UK High Technology Fund.

Continental Europe accounts for 28 per cent of total commitments, with investments from Access Capital Partners and The Partners Group. The US accounts for the remainder, including funds managed by Bessemer Trust and Frank Russell Capital. Existing investors from previous funds account for around half of the total.

While the main emphasis will be on investments in UK companies, Advent envisages that a proportion of the portfolio will also target continental Europe and the US, due to an increasing globalisation of technologies. Up to 40 per cent of investments will be outside the UK, mainly in continental Europe.

One of the main objectives behind seeking a geographically diverse investor base is to broaden industry contacts in areas with a high level of technology and life science investment activity, such as France, Germany and Scandinavia.

The new fund has already made four investments three in the life sciences sector and one in an IT company. The fund joined existing Advent funds in a total investment of GBP3.5 million in Lazy Software Ltd., a start-up venture developing a novel associative database structure and targeting a number of vertical markets and e-commerce applications. It was also the lead investor in a $33 million round of financing for CardiacAssist; and a GBP10 million financing of Avidex, a spinout from Oxford University’s Institute of Molecular Medicine.

Advent Private Equity Fund III has also joined existing Advent funds in investing in genomics company, Oxagen. The company recently closed a GBP31.75 million pre-IPO financing round, one of the largest private equity biotech financings in Europe to date.

Sir David Cooksey, chairman of Advent Venture Partners, said: “We are excited by the positive changes which are taking place in the environment for young growth companies, providing opportunities for attractive returns for all of our investors.”

The company’s previous fund, Advent Private Equity fund II, was raised in 1998 with commitments of GBP100 million and has invested in 24 companies, from which it has seen two realisations. It has achieved a multiple of around 12 times the current share price on its GBP5 million investment in Scipher, an electronics intellectual property business that floated last February. Last September, Content Technologies, an e-mail security company announced its sale to Baltimore Technologies at a multiple of approximately 3.8.