Auda Advisor Launches $300M Fund-of-Funds –

Auda Advisor Associates LLC this month is launching its third fund-of-funds, which will invest exclusively in buyout partnerships, and it is changing its focus to invest with some new groups.

The firm will launch Auda Capital III, L.P. with a $200 million target, but it hopes to raise about $300 million, said Steven Wesson, a vice president. The fund will invest in six to 10 partnerships.

At press time, Auda has already committed about 80% of the $312 million Auda Capital II, L.P., which it raised in 1998 (BUYOUTS May 4, 1998, p. 8).

Like other L.P.s, Auda is concerned that too many of the firms it traditionally has invested with have strayed from their middle-market roots. The firm’s solution is to continue to invest with the larger buyout firms while establishing new relationships with G.P.s that are investing in deals valued between $50 million and $500 million, Mr. Wesson said.

Last year, the firm renewed commitments with groups including Clayton, Dubilier & Rice, Hicks, Muse, Tate & Furst Inc. and Thomas H. Lee Co.-all of which are raising mega-funds.

Some L.P.s have expressed similar concerns that as fund sizes grow firms may leave the middle market, and have set policies to gain exposure to middle- and small-market buyouts.

For example, Virginia Retirement System has set a policy favoring investing in funds raising less than $1 billion, said William Leighty, the pension’s director. California Public Employees’ Retirement System also announced that it would be concentrating its efforts on smaller funds, international partnerships and direct investments (BUYOUTS Aug. 4, 1998, p. 4).

New York-based Auda was established in 1989 to manage investments in the U.S. for the Germany-based Harald Quandt family and expects to raise about 60% of the capital for this fund-of-funds from investors based outside the U.S. The group also expects to raise a majority of its capital from individuals.