Fund focus: Advent leverages global muscle in Asia

Among global buyout managers with a presence in Asia and the capacity to write checks of more than $100 million, Advent International is one of few without a dedicated regional fund. Filippo de Vecchi (pictured), a managing director and the firm’s co-head of Greater China, sees this as a key differentiating factor in a competitive market.

“We don’t have any plans to raise an Asia fund. We believe we bring a lot of value through our global collaboration and global sector focus,” he says. “Understanding trends globally gives us conviction in our investments in China. It’s also extremely valuable for the management teams of target companies because we can support them globally.”

Advent also has no shortage of capital at its disposal for deployment in Asia. The firm recently closed its ninth global fund at the hard cap of $17.5 billion, up from $13 billion in the previous vintage. Up to 20% of that can be invested outside of Europe and North America, and because Advent has a separate Latin America fund, it could theoretically commit $3 billion to Asia.

There are 17 investment professionals covering the region out of Mumbai, Shanghai, and Hong Kong. Greater China headcount has increased 20% since the last fund closed and Advent plans to pursue more of its core global sectors within the country. The firm was previously active in retail and consumer, education and healthcare, and is now looking to include business and financial services. Technology, media and telecom, a recent addition to Advent’s global coverage, is expected to come to China as well once the team has been built out.

The firm brought its global resources to bear in China last year in a new way with the merger of local mattress maker King Koil and the China affiliate of US-based Serta Simmons Bedding to form an entity with a strong presence in the premium brands segment. King Koil and the global parent of Serta Simmons are existing portfolio companies, while the China affiliate was controlled by a third-party licensee. Following the merger, the global parent bought a minority stake in the business and granted it a perpetual exclusive license for Chinese distribution of Serta products.

“It was a complex transaction with full collaboration of our global teams,” de Vecchi says. He adds that much the same approach was taken in the more recent acquisition of Bioduro, a hybrid China-US R&D pharmaceutical outsourcing business. The global healthcare team, as well as several US-based operating partners and industry advisors were involved in the due diligence and continue to support the company by serving on the board.

Bioduro has operations in China and the US and serves a predominantly US customer base. De Vecchi notes that so far it has not been impacted by any overspill of the US-China trade tensions into other sectors. However, part of the investment thesis is differentiating the customer mix, with strong growth prospects identified in Europe and within China itself.

“Our focus in China is really on domestic consumption and we feel there are strong fundamentals,” de Vecchi adds. “There might be some bumps along the way, but the overall trend is solid.”

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• Topics
• Buyout
• Greater China
• South Asia
• Southeast Asia
• Fundraising
• China
• India
• Advent International