Audax readies new mezz fund

On the heels of its successful fundraise for its latest private equity fund, mid-market specialist Audax is preparing to head back into the market with a follow-up mezzanine fund that could aim for as much as $550 million.

Boston-based Audax Group is preparing to launch a follow-up mezzanine fund in the coming weeks. The firm has yet to pin down a target, but a source close to Audax indicated that the PPM will likely have “between $500 million and $550 million” on the cover.

Peter Gummeson, managing director, Audax Mezzanine

Audax Mezzanine, with its primary offices in New York City, is similar to the firm’s private equity arm in that it typically seeks out deals in the middle market. The firm’s first mezzanine vehicle was $440 million (€367 million) in size, and typically invested in financings requiring between $10 million and $40 million of mezzanine capital.

Previous financings include investments in personal care product maker Burt’s Bees, disposable tableware manufacturer Waddington, janitorial and landscaping outfit Sanitors and canned seafood producer Bumble Bee.

Audax founders and Bain Capital vets Geoffrey Rehnert and Marc Wolpow oversee the group, while Kevin Magid and Peter Gummeson each serve as managing directors at the mezzanine arm.

Audax launched the mezzanine fund in 2000, a year after the firm was formed. The California Public Employees’ Retirement System (CalPERS), was an early backer in the fund, and reportedly placed a $100 million commitment in the vehicle.

When the inaugural mezzanine fund was initially launched, Audax started with a modest $250 million target, but had to quickly raise that to $350 million in response to enthusiastic limited partner interest. The fund ultimately exceeded that number by $90 million.
In a press release, issued when it closed its first mezzanine fund, Audax described it as a “non-captive” vehicle that would invest alongside other sponsors, although the firm has selectively made investments in Audax-led buyouts.

The fund launch comes on the heels of the firm raising its follow-up private equity vehicle, Audax Private Equity Fund II. The group raised $700 million for the fund, easily surpassing its $600 million target.

The private equity arm has been active on the exit front in recent weeks. Audax sold its stake in Chart Industries through a $460 million deal to First Reserve, and most recently Audax executed a dividend recap for Dynisco, in a move that returned roughly half of its original equity investment.