Advent Partners’ AUD 300m new fund to clinch more deals this year

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17 AUG 2018

  • Eyes targets with EV AUD 30m-150m, EBITDA AUD 5m-30m
  • Prefers potential deals mentored by advisors
  • Strategic review for Trivantage still ongoing

Australian private equity firm Advent Partners is in talks with a couple of domestic targets with a view to making two more deals this year with its new fund, Managing Partner Robert Radcliffe-Smith said.

The Melbourne-based firm is now 100% focused on investing the 2018 vintage AUD 300m (USD 217m) Advent Partners 2 Fund, Radcliffe-Smith told Mergermarket. It plans to deploy the fund into eight to ten deals within three to three and a half years.

The firm kicked off investment via the new fund by acquiring a majority stake in SILK Laser Clinics, an Australian laser hair removal clinic chain, in February in a reported AUD 50m-AUD 100m value deal.

While it receives approaches regarding its portfolio companies, it is not proactively looking to exit anything this year, he said.

Brand new since 2013

Advent Partners, with assets under management of AUD 500m, focuses on four sectors where it sees growth in Australia: consumer brands, healthcare, education and proven technology.

Some 70% of deals come from these sectors, but the team remains open-minded to others, Radcliffe-Smith said. As an example, he pointed out Advent’s investment in Integrated Packaging Group, an agricultural and industrial packaging maker, which was merged with Pro-Pac Packaging [ASX:PPG] last year.

Advent invests in 33% – 95% stakes, writing equity cheques of AUD 15m-50m for enterprise values of AUD 30m-150m with EBITDA of typically AUD 5m-30m, he said.

The firm wants to be the partner of choice for Australian mid-market businesses seeking growth capital and generational change, he said. The New Zealand market will not be ruled out.

This strategy has been in place since 2013 when the current four equity partners – Radcliffe-Smith, Mark Jago, Brad Lynch and Symon Vegter – took over in a generation shift and put their stamp on the business.

To reflect the changes, it rebranded the funds and name of the firm. The first fund raised after 2013 was named Advent Partners 1 Fund while previous funds were simply called Advent 1-5.

Hence, the latest second fund is actually the firm’s seventh, Radcliffe-Smith explained. The firm was also renamed Advent Partners, from previously Advent Private Capital, in December 2016.

Advent was founded in 1984 and is proud of being one of Australia’s oldest private equity firms alongside CHAMP, according to the partner.

Radcliffe-Smith came on board in 2002 when Advent invested as a generalist, he said.

Aside from the strategy change, the firm has also become more professional and bigger than ever with a total team of 11, Radcliffe-Smith noted.

Another noteworthy factor is the growth of the advisory community in the past couple of decades.

“It is now huge,” he said.

Back in the day, vendors used to call the partners directly pitching their businesses, whereas now 90% of deals are intermediated by advisors, Radcliffe-Smith said, pointing out that Advent much prefers to have potential investments mentored by an advisor.

Former advisors include Credit Suisse and Herbert Smith Freehills, according to Mergermarket data.

Junior Adventures Group

One of Advent’s most successful records is Junior Adventures Group (JAG), in which it sold a partial stake to Quadrant Private Equity in June 2018, with Advent retaining a minority stake, Radcliffe-Smith noted.

Advent is now aligned with majority shareholder Quadrant and will exit at the same time, he noted.

The deal gave Advent a good return, while keeping an interest in the growing business, Radcliffe-Smith said. Quadrant paid more than AUD 100m for an undisclosed majority stake in JAG, a local report said.

JAG, which Advent built through integration of two assets, operates programs at more than 400 schools nationally. The company is always on the lookout for acquisitions, Radcliffe-Smith said.

Back in September 2015, Advent acquired a majority stake in OSHClub, an outside school hours’ care (OSHC) provider which had presence in Victoria and Western Australia. Advent acquired Helping Hands Network, one of the largest providers of OSHC services in Queensland, in 2016. Subsequently, Advent merged the two, forming JAG, and scaled up the business to nation-wide.

JAG became the second largest player in Australia behind Camp Australia, held by Bain Capital, Radcliffe-Smith noted.

Advent professionalized and expanded JAG’s operation by investing in new technology and human resources, career development of employees and providing training through e-learning, he added.

Personalities

Before joining Advent in 2002, Radcliffe-Smith had spent five years at a captive private equity fund, NAB’s National Australia Investment Capital. He also worked at the corporate finance division of KPMG for eight years.

Symon Vegter joined Advent in 2007, previously having worked at KPMG in M&A and restructuring services.

Mark Jago joined in 2009 from ANZ Private Equity, after prior roles at Bain & Company and Unilever.

Brad Lynch joined in 2013 from The Riverside Company, from previous investing roles at ANZ and EY.

The investment committee is made up of the four partners, as well as Investment Director Rob Hooke, non-executive Chair Rupert Harrington and Finance Director and Company Secretary Roland Stadly.

“All partners have children and are family orientated when not working. This is reflected in our core values of integrity, openness, meritocracy and patience”, Radcliffe-Smith noted.

Funds and Exit

With an average holding period of portfolio companies of four years, Advent considers a range of exit options from trade or secondary sale to initial public offering, Radcliffe-Smith said.

Trivantage, an electrical engineering, contracting and switchboard manufacturer, is among outstanding portfolio companies still held by Advent 5, which also owns a stake in Pro-Pac Packaging.

Advent retained LCC Asia Pacific, an Australia-based boutique firm, to weigh options for Trivantage, a media report said in August 2017.

“There are still ongoing discussions”, Radcliffe-Smith said without elaborating.

The firm aims to generate top quartile returns among Australia’s PEs, something Advent Partners 1 Fund has achieved, Radcliffe-Smith said.

Advent Partners 1 Fund, worth AUD 186m and of 2013 vintage, was fully invested earlier this year with the acquisition of craft beer brewer Tribe Breweries, Radcliffe-Smith said.

Fund 1 also owns JAG, dairy products manufacturer Frosty Boy, and healthcare services provider Wellness & Lifestyles.

Advent aims to exit Advent Partners 1 Fund completely and fully invest Advent Partners 2 Fund before its next fundraising, Radcliffe-Smith said, declining to speculate on when the next fundraising will take place.

by Christel Thunell in Sydney with analytics by Mate Taczman

 Advent Partners – Portfolios

Portfolio Companies Fund Date Acquired Months Held Buy Type Dominant Sector Individual Names
Tribe Breweries Fund 1
(Advent 6)
Mar-18 5 IBI Consumer Rob Hooke
Mark Jago
SILK Laser Clinics Fund 2 Feb-18 6 IBI Pharma, Medical & Biotech Brad Lynch

Robert Radcliffe-Smith

Pro-Pac Packaging * Advent 5 Sep-17 10 Other Business Services Rupert Harrington
Symon Vegter
Frosty Boy Australia Fund 1
(Advent 6)
Feb-17 18 MBO Consumer Symon Vegter
Robert Radcliffe-Smith
Rob Hooke
Wellness & Lifestyles Australia Fund 1
(Advent 6)
Dec-15 32 IBI Pharma, Medical & Biotech Brad Lynch
Mark Jago
Junior Adventures Group** Fund 1
(Advent 6)
Sep-15 35 IBI Business Services Brad Lynch
Mark Jago
Rob Hooke
Trivantage Group Advent 5 Aug-08 120 IBI Industrials & Chemicals Robert Radcliffe-Smith
Brad Lynch

*In September 2017, Integrated Packaging Group (Advent 5 fund portfolio) merged with Pro-Pac Packaging. As part of the equity consideration, Advent became the second largest shareholder in the merged group with a shareholding of ~26%.

**Partial exit to Quadrant Private Equity in June 2018. Advent Partner retains minority shareholding in the business.

Advent Partners – Funds

Fund Name Vintage Year Status Final Close Date Final Amount Raised (m) No. of Current Portfolio Companies Dry Powder
(%)
Preferred
Investment Amount / Equity Ticket (m)

Target Enterprise Value (m)

Advent 5 2006 Divesting Dec-06 AUD 300m 2 0% n/a

AUD 10m – 150m

Advent Partners 1 Fund (Advent 6) 2013 Fully invested / Divesting Jun-13 AUD 186m 4 0% AUD 15m – 50m

AUD 30m – 150m

Advent Partners 2 Fund 2018 Investing Jan-18 AUD 300m 1 90%* AUD 15m – 50m

AUD 30m – 150m


Source: Mergermarket (an Acuris company)
*Estimated as of August 2018 – 10% of fund is committed

Updated on 17 August 2018

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