LONDON Advent International has amassed 8.5 billion euros in one of the biggest private equity fundraisings since the financial crisis, helped by the U.S. group's strong track record on returns.
Private equity firms, which raise money to buy businesses to sell them later at a profit, have had a difficult time since the crisis partly because bank financing for their debt-funded deals has become scarce and returns have come under pressure.
The buy-out sector raised some $600 billion a year in 2007 and 2008, but brought in less than $300 million in the last 12 months, according to data group Preqin.
But Advent, whose deals include buying Royal Bank of Scotland's (RBS.L) payment processing business WorldPay, has bucked the trend after showing investors it had outperformed the pack with superior returns.
Advent's sixth fund, raised in 2008, has delivered a 12.4 percent annualised return, according to figures to the end of March from one of its investors, California State Teachers' Retirement System.
That compares with a 10.8 percent annualised return for rival CVC's 2008 fund, and a 5.8 percent return from Permira's 2006 fund, according to the same data.
"We recognised on going out to raise a fund that it is quite a challenging environment. There are a lot very difficult decisions being made on the part of (investors) today on who they will fund and who they will not fund," Bob Brown, managing director and global head of limited partner services.
Advent has raised far more than the 7 billion euros planned initially, making its new fund the biggest since it was founded in 1984.
The new fund - Advent's seventh Global Private Equity Fund - cements the Boston-based company's position as one of the leading global buyouts firms and gives it money to spend for the next five years on medium to large-sized companies worth between 200 million and 2 billion euros.
While a handful of firms, including Blackstone and CVC, have raised larger funds since the onset of the credit crisis, Advent has been faster than its rivals, taking around nine months to raise its new pool of capital.
Private equity firms including Apax Partners , Cinven and Permira all started raising capital before Advent -- which does deals in Europe, North America and Asia from its flagship fund -- and are still fundraising.
Advent has agreed a swathe of deals in Europe in the last month, including the buyouts of German retailer Douglas DOHG.DE, Dutch medical supply company Mediq MEDIQ.AS and Polish retailer EKO Holding EKOP.WA.
The firm has historically invested about 60 percent of the capital raised in Europe, said Brown.
"We like the fact that some people are quite negative on Europe and some are turning their backs on the market," Brown said.
Some U.S. rivals, such as TPG , have reduced their emphasis on buyout deals in Europe, preferring to look for deals in other regions. Others like KKR (KKR.N) have said they see attractive deals to be done on the continent.
Advent also buys companies in Eastern Europe and Latin America through dedicated funds for those regions.
However, not all forays into new regions have been successful for the firm.
Advent closed its office in Japan last year and wound up the $725 million fund it had for deals in the country, finding it impossible to penetrate the private equity market.
Advent was founded by Chairman Peter Brooke, who spun the group out of TA Associates, a private equity firm that specialises in taking minority stakes in fast-growing companies.