Audax Holds Off On Next Fund Till New Year

The slow deal-making market will likely force buyout and mezzanine investor Audax Group to delay the fundraising process for Audax Private Equity Fund IV LP until sometime in early 2010, despite the Boston-based firm’s previous plans to begin marketing the new buyout fund in the fourth quarter of this year, Buyouts has learned.

Terms of the firm’s current buyout vehicle, Audax Private Equity Fund III LP, state that the general partner cannot begin marketing a successor fund until Fund III is at least 70 percent invested. At present, dry powder in that fund is only about 53 percent deployed, according to Co-CEO Geoffrey Rehnert. Fund III closed in 2007 with $1 billion.

Although a target for Fund IV has not yet been finalized, Rehnert said a likely goal for the pending vehicle will be to match Fund III’s capitalization of $1 billion.

According to Audax Group’s Web site, the firm’s most recent buyout activity was its June acquisition of the U.S. and Mexico guarding operations of Garda World Security Corp., a provider of uniformed security, consulting and investigation services.

Though fundraising appears to be on hold for Audax Group’s next buyout fund, the firm’s sub-debt group is moving forward with its next mezzanine vehicle. Audax Mezzanine plans to hold a first close on its $750 million-targeted Audax Mezzanine Fund III by the end of the year.

Audax Group invests in small cap and lower-middle market companies across a wide range of industries, including security services, industrial manufacturing and business intelligence software. Transactions include leveraged buyouts and recapitalizations, corporate divestitures spin-offs and roll-outs. Audax Group invests equity of $10 million to $100 million in transactions valued between $15 million and $250 million. The firm has more than 95 investment professionals in Boston, New York and China.

Audax Group’s first buyout fund, Audax Private Equity Fund I, a 2000 vintage, had a net IRR of 11.8 percent and an investment multiple of 1.3x, as of March 31, 2009, according to the California Public Employees’ Retirement System.