November 12, 2012 7:35 pm

Advent raises €8.5bn for buyout fund

Advent International, the private equity group, has raised €8.5bn for its largest buyout fund to date, even as the industry struggles to match the fundraising totals of the previous boom.

One of the largest such funds raised since the financial crisis, it surpasses in size the €6.6bn Advent raised in 2008 and demonstrates that the pension funds and sovereign wealth funds, who are the primary source of capital for industry, remain committed to at least some marquee investment houses.

Advent, which only began raising the fund in March said the level of interest had been surprising. Since the financial crisis, private equity executives have largely said that fundraising has taken twice as long as before, and last month KKR said it had raised only $6.2bn for its North American buyout fund launched in early 2011, short of an expected $8bn total.

David Mussafer, managing partner for Advent, said: “The feedback we were getting is that it’s an old-fashioned private partnership model. Investors like the alignment of interests and that we have a fairly long record of absolute returns.”

He contrasted Advent’s structure, which has 29 partners involved with the running of its funds, to publicly listed private equity groups, those which are controlled by one or two founders, or have branched out into other areas of business. “We have a singular focus on private equity,” he said.

The fundraising comes as competition for assets is intense. Private equity fundraising is running at less than half the level of the peak years of the credit boom, 2007 and 2008, with only $309bn raised last year, according to Preqin, a data provider.

Privately held companies have pointed to shareholder focus on recurring management fee lines at the publicly held groups such as Blackstone and Carlyle, making a pitch to investors that they use such fees to invest in their business rather than paying dividends.

However, Blackstone, the largest of the listed alternative investment groups, has proved that it is still possible to raise mega-funds, completing a $16bn round of global fundraising earlier this year.

Advent, which has now raised €28bn, said that it has already begun to deploy the capital it has raised. The group has closed on one investment for the fund in the US, mattress manufacturers Serta & Simmons bedding, and has agreed to invest in four other businesses in Europe, including KMD, a Danish IT services group, and Cytec Industries’ Coating Resins arm.

James Brocklebank, Advent managing director, said: “We think the euro will stay together. W e don’t see it going away, and we think there are a lot of opportunities for those with capital.”

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