(Bloomberg) -- Buyout firm Advent is contemplating setting up an investment vehicle targeting mid-sized transactions as it looks to bolster its core private equity business.
Advent, which is focused on buying controlling stakes in businesses, raised $25 billion for its flagship buyout fund in 2022 — its largest fundraising to date. The firm sees a “finite number” of mid-market deals in its main fund, said its Boston-based managing partner John Maldonado, referring to transaction sizes of $200 million to $350 million and companies with enterprise values of below $1.5 billion.
“We find this space interesting, and we certainly have the investment engine that already today sees deals of a smaller size,” Maldonado, who’s also the co-chair of the firm’s investment committee, said in an interview. “Our deal teams might see 10 high-quality opportunities of that check size, which end up on the cutting room floor today, but could be pursued if we had the right vehicle.”
Unlike its peers, which are increasingly turning into multistrategy houses — partly based on the expectation that investors will dedicate more money to those offering a “one-stop shop” model — Advent’s aim is to remain focused on private equity.
“The way we think of growth is what more can we do in private equity? One answer is to look at funds of different sizes, regions, sectors,” said Maldonado. “So that’s kind of the direction of travel for us rather than to leap to non-adjacent categories, like real estate or credit.”
Advent focuses on five sectors: business and financial services, consumer, health care, industrial and technology. The company, which had about $88.8 billion of assets under management as of June 30, also runs dedicated funds for Latin America and technology.
Having a diversified mix of asset classes gives private equity firms an opportunity to boost recurring revenue through management fees, which is particularly important for firms that are listed, or looking to list, as it can help support share price performance.
Advent, for its part, wants to continue to be a private partnership. “Private equity is where our strength is, and we want to stay focused on that and continue to be privately owned,” said James Brocklebank, a London-based managing partner at the firm. Brocklebank has been with Advent since 1997 and also serves as the co-chair of the firm’s investment committee.
“We’re not in an AUM gathering game,” he said. “LPs are coming to the realization that there is quite a distinction between privately owned and publicly listed private equity firms.”