Advent steps back from CEE: Interview with Joanna James

Kimberly Romaine: You set up Advent's CEE team (ACEE) in 1995, making Advent the first global fund to establish such a presence in the region. Why the change of strategy?

Joanna James: As a firm, it's been decided that it's not appropriate to raise a separate programme for CEE. And I agree with that. It's a natural progression with what's going on in the region and in the firm.

The region has changed a lot since 1995. The actuality is that it is increasingly difficult to make an investment case to treat all of CEE as a single block since it just is not anymore. In the mid-1990s, when we started off, it was – the countries were all heading towards the EU and were deemed risky. Therefore, Advent needed a separate fund for that.

Kimberly Romaine speaks with Joanna James about outgrowing a remit

And this worked well – until the financial crash. Only then could we begin to see which countries have truly adapted, rather than merely riding a rising tide. Some countries have done very well, while others have problems.

That is the actuality. The sentiment is interesting. Investors have not turned against CEE; on the contrary in fact. Investors – particularly some in the US – divide the world into three camps: US, Europe and emerging markets. CEE is no longer considered an emerging market, but as part of Europe. And so they say: 'Why do I have to invest in a separate fund to do a deal in Poland?' It's no longer considered as a different type of risk from, say, Spain or Italy. It's not just CEE that's changed, but the rest of Europe, too.

I've been in private equity for 30 years and I got into CEE because it was exciting. But you can't fight the same battles forever because things change.

KR: What of ACEE IV? LPs were rumoured to have been impatient with ACEE IV's investment pace, and then underwhelmed by its performance thus far.

JJ: I think our current fund will turn out to be a good one. We're flat now but that is reasonably normal for that vintage and among our peer group. And I would rather explain to my LPs why it's taken me a long time to put money to work, than to explain why I lost it.

KR: ACEE has had some great success in CEE – Terapia and BTC* to name a couple. Are there still great deals to be done, and will Advent still back them?

JJ: I've always said we'll invest a separate programme until our investors don't want us to. And we have the great advantage that we have a choice. The latest Advent global fund is allowed to invest in CEE – there is no 'carve-out'. We retain teams in Warsaw, Prague and Bucharest so there is scope both to manage the existing portfolio as well as seek out new opportunities for Advent.

We will no longer do 15-20 deals over a five-year cycle, but will do fewer, selectively, following a sector-based approach. Great deals will still be done in CEE, but not 15-20 each by four different dedicated GPs over the same time horizon.

KR: What are your plans?

JJ: I'll remain committed to my Advent programme, but can also spend more time with my own charity, which I set up five years ago. That's more than enough to get me out of bed in the morning.

As you know, Chris Mruck and I have co-headed the fourth Advent CEE fund and he and the rest of the senior team will remain focused on the central European region.

I will be with Advent for the next three years at least; I am part of a long-term plan. I'll carry on with portfolio companies I'm involved with; I'll remain on the EVCA board; and help with other CEE duties as needed. There is a real esprit de corps among the team to make it work. We have emotional and financial reasons to make that successful.

*James was unable to comment on the litigation around BTC (Vivacom) owing to legal restrictions.

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Send to  

• Topics
• CEE
• Industry
• People
• Advent International
• Top story