The fund, managed by around 40 partners around the world, has received more than 20 billion euros in requests from investors. Anchored in Europe, the purchaser of Safran Identity and generics from Sanofi does not rule out getting its hands on listed companies, but never with a hostile perspective, declares to “Echoes” Cédric Chateau, its manager in France.
Three billion dollars every thirty days. Among the stars of private equity, this is the new record to beat. After CVC, which raised $ 18 billion in six months two years ago, Advent’s pool of forty associates in turn crossed the line of $ 17.5 billion (16 billion euros) raised on a semester.
In fact, they have even received more than 22 billion dollars in requests from investors in Europe, the United States and Asia, including large French “family offices”, the Abu Dhabi fund and large funds. American and Canadian pensions. According to our information, they will even be exempted from reaching the “hurdle rate”, this performance threshold below which the managers do not receive any capital gain. A rare occurrence in the sector.
Up to 42% efficiency
The Advent team, it is true, is breaking performance records. Its funds from 2005 to 2016 generated up to 42% per year, according to Calpers. And that of the 2008 crisis an annual performance of over 17%, with a multiple of more than twice the stake.
“What matters to investors is consistency. Our returns are similar regardless of the cycles because we invest company by company and we do not play the cycles ”, explains Cédric Chateau, associate director of Advent
Advent is also taking advantage of the good momentum for the unlisted and the “flight to quality” of investors. “We are at a pivotal moment in private equity, continues the partner, the environment is very favorable to the unlisted. The asset class weathered the crises of 2007 and 2011 by systematically outperforming the stock market. Pension funds must turn to riskier underlyings to remunerate pensions. But at the same time, these investors are elitist. Funds that perform well rise very quickly, unlike the others ”.
Its investments in Europe generate a good part of the performance of the fund born from the split of the international activities of the American TA Associates in 1984. In France, its managers won the battle against Gemalto to buy Safran Identity, the sensitive activity of biometrics of the French group under the eye of the Elysee and Washington for 2.4 billion euros. In June, Advent also landed Sanofi’s generic drugs for $ 1.9 billion.
“There will be a price adjustment”
Advent fearful of the price bubble? “We are at a cycle high, valuations fueled by the low cost of debt are very high, recognizes Cédric Chateau. But we are prepared to pay the full price if we are convinced of the performance and potential of the company. But there will be an adjustment, of course. “ Therefore, raising a fund today is not bad timing if acquisition prices fall.
While the “deal-flow” is relatively calm in Europe, Cédric Chateau says he is ready to study opportunities on the stock market. “We have studied delisting [le nom d’Advent a été mentionné pour le courtier April, NDLR], but with a private equity approach. We are not doing anything hostile. “
No quotation in sight
On the other hand, unlike its big American rivals and the Swedish EQT, “Advent is not intended to be listed on the stock exchange, underlines the partner. We want to keep our traditional model of investment funds owned by its private partners with very strong specialization, national roots and high-level operating partners like Jean-François Cirelli in France. We don’t want to become an asset management platform. “
There is therefore no question of diversifying. The only exception is tech. In the wake of its competitors, Advent is setting up in San Francisco and, according to Pitchbook, is raising a $ 1 billion fund. “We are aware that we are not pioneers, says Cédric Chateau, but unlike others, when we establish ourselves in a market, we stay there ”