Firm: Advent International
Fund: Advent International GPE VII LP
Target: $10.8 billion
Advent launched the process officially in March, though it had begun premarketing in late 2011, Managing Partner David Mussafer told Buyouts. The firm also turned away a good amount of capital: Investors in the final close of the fund had to scale back their commitments by 50 percent or more, according to the firm. That Said, Advent certainly experienced different market dynamics from the last time it raised a fund.
“Investors were extremely thorough, so the diligence experience we went through on a global scale was by far the most extensive we’ve ever been through,” said Mussafer, who specified that “the depth of the questions they want to see…is the most significant that we’ve ever faced.”
More than 80 percent of commitments to the fund, Advent International GPE VII LP, came from existing limited partners, executives told Buyouts, which include the California Public Employees’ Retirement System, which committed $450 million; the Minnesota Board of Investment, which committed $200 million; and the Pennsylvania State Employees Retirement System, which committed $50 million. But the firm bolstered its investor base with undisclosed commitments from a number of sovereign wealth funds, as well as Middle Eastern and Asian investors, Bob Brown, managing director and global head of the firm’s limited partner services group, told Buyouts. He declined to name any of the investors, but the firm disclosed that 50 percent of the fund’s investors are from North America; 27 percent are from Europe; 17 percent are from what it calls the Asia-Pacific region; and 7 percent are from the Middle East, South America and South Africa.
“Part of my joining and the growth in the team have been directly related to the fact that investors are requiring more,” Brown said. “More off-cycle updates, more rigorous reporting, etc.”
Brown joined the firm in March 2010, after 11 years at The Carlyle Group, to serve as global head of its fundraising and investor relations group, which has since increased by 50 percent to 12 professionals. The firm, which has more than 110 investment professionals, has also dramatically built out its staff of operating partners, or former industry executives who assist the deal team. Between January 2008, when Advent hired Conor Boden from 3i Group plc to lead the group, and November 2009, the program had more than doubled to 70 professionals, according to a November 2009 Buyouts profile of the program. Staff across the entire firm has increased more than 50 percent since 2008, Mussafer said.
“They have increased the infrastructure needed to manage a fund of this size over the years and have fine-tuned the vetting and approval process slowly, and LPs recognize that,” said Marc Bonavitacola, a managing director and head of U.S. private equity at SVG Advisers, a fund of funds manager and longtime investor in Advent. “That said, they also have other strategies in Latin America and Central and Eastern Europe, so they need to balance the conflicts and oversight.”
The firm’s performance no doubt also assisted its cause. Its fourth global buyout vehicle, a $1.9 billion, vintage 2002 fund, had generated an investment multiple of 3.2x and a net internal return of 52.1 percent as of March 31, according to a CalPERS report. Meanwhile, it’s fifth global fund, a $2.5 billion, vintage 2005 fund, had generated an investment multiple of 2.5x and a net IRR of 51.6 percent, while its sixth fund, a 2008 vintage fund that raised $10.8 billion, had generated an investment multiple of 1.3x and a net IRR of 13.6 percent, the state pension fund reported.
Advent will continue to invest $100 million to $500 million of equity in deals that range in size from $200 million to $2 billion. It targets five broadly defined sectors: business and financial services; health care; industrial; retail and consumer; and technology, media and telecommunications.
Mussafer and his colleagues are confident the firm will be able to find enough deals in which to invest the fund. Typically, Advent invests $3 billion to $4 billion annually around the world; it is on pace to invest as much as $5 billion by the end of 2012. The firm has already closed one acquisition with fund VII—its acquisition of bedding company Serta Simmons Holdings, while it has agreed to buy or made tender offers on four other companies.
(Senior Editor Gregory Roth contributed to this report.)