Audax racks up $7bn of interest for Fund VI

Investors had a choice of fee and carry options on the $3.5bn fund, with most opting for the traditional two-and-20.

Audax Group, the US mid-market investor, received more than $7 billion worth of interest for its sixth flagship fund, which closed at its $3.5 billion hard-cap in August.

The Boston-headquartered firm notified investors of its intention to raise Fund VI in spring and distributed an offering memorandum in Q2, making it Audax’s quickest private equity fundraise to date, co-chief executive and co-founder Geoffrey Rehnert told Private Equity International.

Well over 90 percent of LPs in Fund V, a $2.25 billion 2015-vintage, reupped, Rehnert said. Over 50 percent of Fund VI’s LPs were US-based, followed by Europe, with the remainder including commitments from Latin America, the Middle East, Australia and New Zealand.

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Investors had a choice of a 2 percent management fee and 20 percent carried interest rate or a one-and-30 arrangement – the same terms as Fund V, Rehnert said. The majority selected the former terms, which is typical of most private equity funds, though a “significant minority” chose the latter.

The hurdle rate was a standard 8 percent.

Audax employs a buy-and-build approach to its investments and is targeting around 35 to 40 platform acquisitions from Fund VI, with a further 10 add-ons to each portfolio company. Fund V – which is 75 percent invested in 26 companies – is expected to complete one or two more platform deals before the firm begins to deploy Fund VI.

The firm has 225 employees across its private equity, mezzanine and senior debt arms. The private equity division has 15 managing directors, though it is likely to promote additional team members from within as it deploys Fund VI.