Advent International has launched its first tech-focused vehicle with a target of $1 billion, according to Buyouts, becoming the latest major private equity firm to indicate an increasing appetite for tech deals.
The news comes about seven weeks after Bryan Taylor joined Advent as a managing partner and leader of the firm’s tech investment team. Taylor’s hiring coincided with the opening of a new office in the Bay Area, part of what an Advent press release at the time described as the firm “deepening its commitment to the technology sector.” Most recently, Taylor was the co-head of the tech group at TPG Capital, where he helped lead a team of 20; Advent’s tech group currently has more than a dozen employees across North America and Europe.
Reports of the debut tech vehicle also come as Advent is in the midst of another major fundraising effort. Public LP documents from earlier this month showed the firm has begun gathering commitments for its ninth flagship buyout fund, which reports from last autumn indicated could target at least $13 billion. That would equal the sum Advent raised for its prior flagship fund, which hit a $13 billion hard cap in 2016.
Earlier this week, another private equity investor formed a new fund focused on the tech space, albeit a very specific slice of it: Caisse de dépôt et placement du Québec unveiled its CDPQ-AI Fund, a $250 million pool that will be put to use backing companies from Québec with “a proven track record in artificial intelligence.”
Across the entire private equity landscape, firms are raising more cash for tech investments. At the end of January, buyout giant The Carlyle Group closed its latest European tech fund—which will also be deployed in the US—on €1.35 billion (about $1.5 billion), a serious increase from a 2015 predecessor that brought in €656.5 million. Carlyle’s close came a mere two days after Thoma Bravo, a longtime specialist in the tech space, wrapped up a $12.6 billion mega-fund, one of the largest vehicles ever that will mainly target tech companies.
In each of the past four years, there has been an increase in the percentage of overall PE investments in the US and Europe taking place in the IT space. During 2019, though, the numbers are full-on booming. More than 22% of completed deals so far this year have been in IT, per the PitchBook Platform, a major jump from last year’s 18% rate and a whole different universe from the 13% clip logged as recently as 2015. For years, the B2C space ranked second only to B2B in drawing the most PE deals; now, it seems IT has clearly overtaken B2C as the No. 2 choice.
And while Advent may be among those contributing to that change, tech deals are far from the Boston-based firm’s only focus. In March alone, Advent has been linked to a dizzying array of potential billion-dollar deals. The firm agreed to buy German chemicals company Evonik for €3 billion, while a potential €1.8 billion buyout of Italian debt provider Cerved fell apart after news of ongoing negotiations leaked to the press. Advent has also been among a host of firms named as possible buyers in a handful of very expensive auctions, including ongoing sale processes for Bayer‘s animal health unit, the skin health unit of Nestlé, and Kantar, a data analysis business owned by WPP.
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