advent Flashcards
Introduce yourself/walk me through your cv
- I’m Abbas and I’m a second year at LSE Studying Economics and Economic History
- Heavily involved and leading charitable groups for years in the UK and even in Africa through loans to hospitals and microfinance to the community.
- Seeing the impact of fundraising I took an interest in the healthcare industry working at the HQ of MACC Care a popular care home provider, Healthcare department of Downing an investment firm in London. Provided me with business specific knowledge and interpersonal skills but for me it lacked the technical skills of a longer finance internship.
- At LSE I’ve carried on this interest in investments through multiple stock pitch competition such as achieving 2nd in the LSE Investment Competition, capitalising on my public speaking certifications, and being chosen as 1 of 4 to the LSE Student Investment Fund from the entire cohort after a very competitive process.
- Confirmed this through my internship this summer at Avington, a boutique that specialises in luxury hotels, where I worked on multiple different deal mandates from sucg as securing a mandate for an advisory role on an $8 billion sale. Enjoyed the steep learning curve but most enjoyable experience was actually asset management and family office side. Enjoyed the higher responsibility and intimacy with each asset or investment.
In my spare time, as mentioned before, I work a lot in the charitable space as I serve as an advisory role to previous organisations I led and I now run an organisation called Sherpa Mentors, a west-midlands based mentoring group that has mentored over 120 mentees from low socioeconomic and underrepresented backgrounds. Enjoy football too but even more so from the important financial perspective, following deals such as Chelsea as well as upcoming sagas like Friedkin and Everton.
Why Advent
2 main reasons; huge global scale since the 80s with a strong operational focus
Advent has a huge global mandate with $94bn AUM with a unique operational focus to create sustainable growth. I saw this during my internship , a global investment bank for ultra-luxury hotels, part of my role was formulating a weekly deals and hospitality industry newsletter. I saw how insight and utilising multiple branches of a business leads to huge value creation within real estate e.g. M’As D’en Bruno in Barcelona, capitalising on knowledge of winery resorts –> break into the top 100 list of hotels, getting 6th best hotel in the world
I saw this in the Rubix deal where the unnder managed business was acquired to act as aplatform for large scale consolidation ti druve a ibe stio sgio ub a verg fragmented industry along withh digital infrastructure. Increasing acquisitions to 10 a YEAR FROM 3-5.
Why PE?
PE investing is about having the biggest impact through investing and improving assets to be the best possible —> Kibaha —> hospitals curing thousands, markets making communities thrive —> made me interested in the scale of capital –> the scale of firms like Advent is exactly where I want to be, try and find value utilising expertise similar to trubix dEAL —> same I experienced at Avington, family office investment became 7th in the world.
What are some trends you have been following in the PE sector?
- Limited Partner Focus on Distributions
Limited partners are increasingly focused on distributions and are directing new capital commitments to a select group of favoured funds1234. They are applying pressure on general partners to accelerate the pace of distributions as they grapple with cash flow constraints13. This selectiveness is evident in the fact that, in the buyout sector, the 10 largest funds closed in the first half of 2024 captured 64% of total capital raised, highlighting the concentration of capital towards larger, well-established firms4. - Difficulty Exiting
Exiting investments has become very challenging in the current market environment. While exit value improved somewhat in the first half of 2024, it was still anticipated to be the second weakest year for exit value since 20165. As of mid-year 2024, global buyout-backed exit value was projected to be $361 billion, representing a 17% increase from the previous year5. The number of exits was also expected to remain very low6. This trend has persisted from 2023 when global buyout-backed exits declined by 44% from 2022 to reach $345 billion7. The sources suggest that these difficulties are rooted in the sharp rise in interest rates and inflated valuations8. - Focus on Operating Improvements
To counter the challenges posed by high interest rates and lofty valuations, general partners are under increasing pressure to demonstrate the value they have created in their portfolio companies1. It is no longer enough to rely on multiple expansion and revenue growth to generate returns9. Instead, demonstrating operating leverage through strategies that boost both revenue and margins has become crucial. This shift in focus underscores the need for a more hands-on approach to portfolio management, involving active operational improvements to drive profitability910. - Macroeconomic Uncertainty
The macroeconomic environment, marked by uncertainty and high interest rates, represents a significant obstacle to closing transactions1112. Despite a period of stability in rates set by the Federal Reserve, interest rates had not fallen as predicted by mid-year 202411. This unexpected persistence of high rates has presented challenges for dealmaking, valuations, and exits, contributing to a climate of tentativeness in the private equity market112. - Growth in Secondaries
The market for secondary funds is expanding rapidly, propelled by the demand for liquidity solutions13. Secondary funds provide an avenue for general partners and limited partners to sell or restructure their private capital holdings to access liquidity13. This segment is still relatively small, currently providing around $120 billion in liquidity per year13. However, its potential for growth is substantial, especially in the context of a market grappling with a backlog of unsold assets and limited exit opportunities13.
What is the business model of Advent
Advent International is a global private equity firm specializing in buyouts, growth equity investments, public-to-private transactions, and recapitalizations across various sectors and regions. Its primary business model involves raising capital from institutional investors to acquire and manage companies, aiming to enhance their value over time.
Revenue Streams:
1. Management Fees: Advent charges its investors (limited partners) management fees, typically a percentage of the committed capital, to cover operational expenses such as salaries, due diligence, and administrative costs.
2. Carried Interest (Performance Fees): Upon successfully exiting investments, Advent earns a share of the profits, known as carried interest, usually around 20% of the returns exceeding a predefined benchmark.
3. Transaction Fees: In certain deals, Advent may receive fees for services like arranging financing or providing strategic advisory to portfolio companies.
Monitoring Fees: Advent might charge fees for ongoing oversight and support provided to its portfolio companies throughout the investment period.
Why Buyside?
Always had a native interest and passion for investing. (Simpsons) —> managed a small portfolio through YouTube, books and learning from huge value investors —> took that into lse, second stock pitch in lse investment competition, one of only 4 investors to be chosen from the first year —> thought investment banking might be for me but most interesting part was evaluating family office investments and optimising current e.g optimising every small detail from procurement to the material on roofs, everything made a big impact.
what do you expect from this internship
I expect to start off with performing basic tasks and hopefully being able to talk to seniors about their experiences and learn from them. I hope to use my resourcefulness and research to find ways to add value to my tasks and prove my competency. I hope to be able to then deliver on tasks above what was expected by commiting myself to spend extra time with seniors to learn more.
Tell me about a time when you used strong communication
I use strong communication to organise and direct team members to always keep in contact and prioritise busy deliverables. For example, during my recent internship I would make sure that every morning my colleagues were aware of my work for that day and if I could help them in anyway. This made them fully aware of what my capacity was as well as what to prioritise as a team. It made me comfortale in the team and led to me suggesting large producitivy improvements as collegaues trusted my ability to deliver through seeing it in action daily.
Tell me a time when you had to show leadership
Prefer leadership where you also keep yourself within the team enviroment to maintain your understanding of bottom-up processes. For example, leading the Charity Committee, despite delegating events to executive members, I would retain a close relationship with all members and workers. This allowed me to still understand key processes that could be optimised for example by being present at every culture week assembly, I realised how event quality was immensely impacted by who we had on IT, so rather than just do a rotational list of members, I formed an IT team to optimise all of our event operations. It led to further specialised teams such a Graphics that became part of core strategies in marketing. Reached 35k and king charles congrats
Tell me about a time when you handled lots of different tasks
Year 13 Secondary School: Head Boy, Head of Economics, Debating, History Society. President and Founder of Charity Committee, all with A-Levels and Oxbridge applications.
Needed a way to have as much time as I could while making sure I was committed to all of them, did that through organising school study rooms. This way I could focus on achieving my academics while utilising productivity techniques such as the Pomodoro technique. It also meant I could fufill my society commitments as everyone knew when to find me if needed for a quick response. It allowed me to log hundreds of hours in total without crumbling under the pressure and maintaining school commitments.
RUBIX
Advent International’s investment in Rubix, through the merger of Brammer and IPH, exemplifies its operational growth strategy focused on consolidating fragmented markets, implementing operational improvements, and driving value creation through targeted mergers and acquisitions (M&A)(The mechanics of creati…).
The rationale behind this deal was to create a leading European provider in the maintenance, repair, and overhaul (MRO) sector. By consolidating two key players, Advent positioned Rubix as a “one-stop-shop” in the industrial MRO distribution market, an approach that strategically leveraged scale as a differentiating factor in a fragmented industry. This approach aligns with Advent’s operational growth strategy, as Rubix has since completed over 70 acquisitions, significantly increasing its market share, product range, and capabilities(The mechanics of creati…).
Key components of Advent’s operational strategy evident in the Rubix deal include:
1. Platform Creation for Consolidation: Rubix became a platform to drive market consolidation. By acquiring Brammer and merging it with IPH, Advent was able to accelerate the M&A pace, increasing acquisitions from three to five per year to nearly ten per year, adding scale and enhancing service capabilities(The mechanics of creati…).
2. Operational Improvements: Advent implemented a value creation plan focusing on improving Rubix’s digital capabilities, procurement, and operational efficiency, along with branch and warehouse consolidation to drive economies of scale. These enhancements helped reduce costs and improve customer service(The mechanics of creati…).
3. Digital Transformation and Omnichannel Expansion: Recognizing the growing demand for digital solutions, Advent invested heavily in digital infrastructure, turning Rubix into an omnichannel provider. This transformation included e-procurement systems and an online platform, which contributed significantly to sales growth, especially amid increased digital demand during the COVID-19 pandemic(The mechanics of creati…).
In summary, Advent’s investment in Rubix highlights a strategy that combines M&A-led market consolidation with targeted operational enhancements and digital transformation to create a market leader, illustrating Advent’s approach to operational growth through value creation and scalability.
