Advent set to launch next flagship fund

Advent International has been talking to limited partners about its seventh global private equity fund, which is expected to target at least €7 billion, according to three people with knowledge of the discussions.

The fund target could not be officially confirmed with Advent, which declined to comment.

Private placement memorandums on the fund have not gone out, but are expected in the next week or two, according to one institutional investor who has seen a pitch book on the fund. The LP said the pitch book contains no information about terms on Fund VII. “Very strange,” the potential LP said. The pitch book set the target at €7 billion, the LP said, but other sources have said the firm could target up to €8 billion.

Advent collected €6.6 billion for its sixth global private equity fund, which closed in 2008. Fund VI was producing a 7.9 percent internal rate of return and a 1.10x multiple as of 30 June, 2011, according to performance data from the California Public Employees’ Retirement System. CalPERS committed $500 million to Fund VI.

“Performance has been good … better than some of the true mega [funds] out there,” said one industry source.

Advent’s global private equity fund series targets upper mid-market investments in North America and Western Europe. The firm focuses on five core sectors – business and financial services, healthcare, industrial, retail/consumer and technology, media and telecoms.

Recently, the firm announced the acquisition of risk management solution company TransUnion Corporation alongside Goldman Sach's private equity unit.

The firm has a diverse set of funds for various geographies. Advent in 2010 closed its $1.65 billion fifth Latin America fund, one of the largest in the region that was followed by several other billion-dollar investment vehicles from other managers.

Last year, Advent, in consultation with its LPs, decided to wind down its Japan-focused operations. The firm closed its Tokyo office and “wound up” its $725.3 million Japan Private Equity Fund, which closed in September 2008 and didn’t make any deals. The firm declined to comment about whether the fund’s capital would be returned to limited partners or used for a different strategy or if management fees had been collected and would be reimbursed.

“Our focus has shifted to a broader strategy for Asia which will enable us to explore the many opportunities in China and other emerging Asian countries,” a spokesperson told Private Equity International at the time.

Advent will hit the market at a time when LPs are being extremely selective with their commitments, and several other large firms have been sucking up capital.

The Carlyle Group is reportedly targeting $10 billion for its sixth flagship fund, though it’s not clear if that fund has officially launched. Kohlberg Kravis Roberts is trying to raise between $8 billion and $10 billion for its 11th North American fund, and has so far collected around $6 billion.

BC Partners announced this week is has closed its ninth fund on €6.5 billion, the largest buyout fund to be raised in Europe since the collapse of Lehman Brothers.

Advent may not be affected by other big fundraises that have taken place, however. Some of them, including The Blackstone Group, which closed its most recent fund on $16 billion earlier this year, and BC Partners, have been in the market for several years.

Also, Advent has a different investment profile from other big firms.

“Advent is more of a large mid-market fund than a mega-buyout fund – it tends to fish in different ponds than Blackstone,” according to an industry source with knowledge of the fundraising market. “The real test for Advent will be funds launching now after the crisis (at least in the states) has passed. Carlyle [and others] are likely the 2012 competition, but Advent is a different beast.”