Advent raises record USD25 billion for global PE fund despite signs of fundraise slowdown

 

Advent International has completed its largest ever fundraise – and one of the largest seen in the private equity industry – with the close of its 10th global private equity fund at a record USD25 billion.

The launch of the new Advent GPE X fund – which reached its hard cap in investor commitments after only six months in the market – comes at a time when global private equity fundraising appears to be slowing as investors become increasingly cautious against a backdrop of mounting macro-economic challenges and geo-political pressures.

The close of the GPE X fund takes assets under management at Advent International – one of the private equity industry’s oldest and largest firms – to over USD100 billion. Together with the launch last year of the USD4 billion Advent Tech II fund, the firm’s second dedicated technology fund, Advent has raised USD30 billion in the last 12 months from its LPs and internal capital – while the new global private equity fund is 40 per cent larger than its predecessor GPE IX fund, which raised USD17.5 billion in 2019.

Advent said commitments to the latest fund came from a broad mix of international investors, including public and private pensions, sovereign wealth funds, endowments and foundations, institutional fund managers, family offices, and high net worth individuals. Most of the commitments came from existing LPs in prior Advent funds.

“The GPE X fundraise, alongside our recent raise for its companion fund, Advent Tech II, are a testament to the trust our investors place in us, particularly in challenging global economic and political circumstances,” says David Mussafer, managing partner and co-chair of Advent’s executive committee. “We are humbled and invigorated by their trust.”

Following the same successful strategy as prior GPE funds, GPE X will have the flexibility to deploy capital across geographies, sectors, deal types and sizes. GPE X will maintain its predecessors’ focus on Europe and North America, while also continuing to build Advent’s active local presence in the fast-growing Asian market.

Investments in GPE X will range across five core sectors: business and financial services; healthcare; industrial; retail, consumer and leisure; and technology. Advent said it will also continue to focus on investments where it has a strong track-record, such as carve-outs from major corporations and public-to-private transactions. Since its inception in 1984, Advent has invested more than USD15 billion in over 90 corporate carve-outs across 28 countries and completed more than 25 public-to-private transactions.

Advent’s record fundraise comes at a time when many other marquee-name PE firms are also in the market with new mega-fund launches – including Thoma Bravo, Carlyle, Blackstone, Vista, Permira, Warburg Pincus, TPG and Apollo – while KKR also recently closed its largest ever private equity fundraise.

While there is no evidence yet of any cooling in allocator appetite for big funds from the largest and most experienced firms, there are signs that overall private equity fundraising activity is slowing as a result of the increasingly bearish and volatile market environment.

In its Q1 2022 Private Equity Report, alternatives data and analysis group Preqin said global private equity firms had raised USD116 billion from 137 funds in the first three months of the year – a 10 per cent decline from the previous quarter and a drop of 38 per cent from the first quarter of 2021.

That said, 2021 broke all previous records for PE fundraising – with new fund launches amassing a total of around USD750 billion, and with several leading groups such as Hellman & Friedman, Clayton Dubilier & Rice, EQT, Bain Capital, TA Associates and Apax completing mega-fundraises.

“2021 was always going to prove a tough base of comparison, and fundraising has indeed softened,” says Cameron Joyce, senior vice president and deputy head of research insights at Preqin. “Global asset allocators continue to closely monitor inflationary trends as well as interest rate expectations, but appetite for private equity appears to remain intact overall.”

Speaking at the World Economic Forum annual meeting in Davos on a panel session entitled Shaping the Future of Investing, John Graham – CEO of Canada’s USD500 billion CPP Investments public pension plan, one of the largest global allocators to private equity – said his organisation currently saw better opportunities in public rather than private markets.

“Right now, internally we probably see more value in the public markets than the private markets, in that the public markets have taken some of the pain – there might be more to come – but there’s probably more value in the public,” said Graham.

 

 

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