Advent International’s escalating commitment to Asia is plain to see. Around USD 3bn was deployed across 14 deals in the region from the firm’s 10th global fund, which closed in 2022, increases of 70% and 100% on the prior vintage.

Towards the end of that investment cycle, the firm also added two geographies to its Asia coverage, suggesting more to come from the recently closed GPE XI.

Building teams for Australia and New Zealand and Japan offers inroads into developed Asia’s leading buyout markets, complementing existing capabilities in Greater China and India. However, Shweta Jalan, a Mumbai-based managing partner at Advent, played down the notion of overtly chasing chunky deal flow.

“We’ve always been flexible from a deal size standpoint in Asia. Our choice of those two markets was informed by the overall opportunity,” she explained. “Both offer control transactions and both are still very underpenetrated by private equity. They were at the right stage of evolution for us to capitalise on the opportunity.”

Historically, equity cheques in Asia have ranged from USD 150m to nearly USD 1bn. The new local teams have already contributed, picking up Australia-based Automic and Japan Wellbeing for reported enterprise valuations of around AUD 725m (USD 470m) and JPY 200bn (USD 1.23bn), respectively.

In August, Advent agreed to acquire New Zealand’s NZCR Group. The transaction, said to be around AUD 1bn in size, is expected to close before year-end.

In contrast, the seven deals completed in India since Fund X closed are all growth equity. They include a Series D for KreditBee with an initial equity commitment – Advent has since re-upped – of USD 100m.

Vertical integration

GPE XI closed on nearly USD 27bn, surpassing the USD 26bn target and the USD 25bn raised for GPE X. Advent has also introduced a USD 3bn mid-market strategy, but Jalan observed that this vehicle would concentrate on the US and Europe.

Asia deal count has grown steadily, with a single investment in the 2008-vintage GPE VI, which closed on USD 10.4bn, to 14 in GPE X. It roughly matches the step up in deployment across the vintages: USD 120m in GPE VI, followed by USD 640m, USD 1bn, USD 1.75bn, and USD 3bn. The region has accounted for a double-digit share of investment in each of the last two funds.

Advent continues to emphasise its vertically oriented structure, concentrating on five sectors – business and financial services, consumer, healthcare, industrials, and technology – and building teams for each one that cut across different geographies.

Jalan noted that monthly sector calls, during which deal pipelines are discussed, often find points of commonality. Past investments in India and the UK helped Advent shape its approach to Autonomic, a provider of global registry and fund administration services. It was much the same with NZCR.

“With NZCR Group, there were similar investments in the US and India. We want to be able to rely on knowledge of the sector – muscle memory of what has gone right, what has gone wrong – and then a deep operating partner bench,” said Jalan.

The firm takes a bottom-up approach to sourcing, settling on attractive sub-sector themes and identifying suitable targets. Consideration is given to macro factors and certain deal types might be deprioritised. In China, for example, investments tend to focus on addressing domestic demand. A company serving primarily US customers would unlikely pass muster.

At the same time, macro doesn’t dictate country strategy. India manufacturing is gaining traction on the back of government initiatives promoting supply chain indigenisation. While Advent has invested in industrials before and continues to look for opportunities, the rationale isn’t necessarily policy driven.

“Industrials and manufacturing are definitely an area of focus, and this does play into the private capital capex cycle coming back, supportive regulation, and ease of doing business,” said Jalan. “But these factors help the investment thesis, they aren’t the core reason for pursuing that theme.”

Exit options

India is responsible for the bulk of Advent’s Asia liquidity events over the past 24 months. These include Bharat Serums & Vaccines and Manjushree Technopack – the former went to strategic buyer for USD 1.6bn, the latter to another sponsor for USD 994m – and Aditya Birla Capital via open market trades.

The current China portfolio includes three pre-2023 investments, with contract development and manufacturing organisation (CDMO) BioDuro nearing a seven-year hold. While acknowledging the softer exit environment, Jalan noted some China assets are being prepped for near-term exits. To some extent, macro factors weigh on the choice of channel.

“We want to have multiple options – a sale to a domestic strategic, a sale to a sponsor, or a listing. We don’t want to rely on MNCs buying assets in China,” she added. “We could do that in India; it’s not so difficult to underwrite a global company coming in for a strategic asset there.”