OUT OF AUDA

The entire team of secondary investors at Auda Advisors has left to launch a new firm by the name of Newbury Partners.

The team is led by Richard Lichter, a veteran secondary investor who has worked at global secondary specialist firms Landmark Partners and Lexington Partners. In 1993, he joined New York-based Auda to create a dedicated private equity secondary investment business.

Lichter has brought with him to Stamford, Connecticut-based Newbury Auda's entire secondary team, including Michael Ireland, Christopher Jaroch, Justin Pollack, David Shyu and Brian Kapetanis. Gerald Esposito also joins the firm as a chief investment officer, having previously been CFO at French bank BNP Paribas.

At Auda, Lichter and team oversaw a $410 million (€323 million) secondary investment fund, which held a final close in 2003. The fund is now roughly 95 percent invested, according to a source familiar with the transaction.

Auda was formed originally to manage the wealth of Germany's Quandt family, which controls German car giant BMW. The firm now also manages third-party capital in private equity and hedge funds of funds. The remaining US partners in charge of Auda's private equity programme are Stephen Wesson and David Andryc. The firm is led by Marcel Giacometti.

A source says Lichter left Auda over the summer.

Newbury will pursue smaller secondary transactions, in line with the strategy pursued by Lichter at Auda. Average deal sizes will range between $20 million and $25 million. A person familiar with the new firm says Newbury will not shy away from doing much smaller deals if it sees value in forming a relationship with the seller.

One rule of thumb in the private equity industry is that it takes the same amount of time and resources to evaluate a $1 million partnership interest as it does to vet a $100 million partnership interest. Therefore, many secondary players shun small sellers and deals. Newbury may, therefore, be in the process of carving something of a niche what is widely acknowledged to be an increasingly crowded secondary market.

CALSTRS BOOSTS ALTERNATIVES BY $11.5BN
The second-largest pension fund in the US has significantly expanded its target allocations to alternative investments, including to private equity and real estate. The move was taken by CalSTRS' board in an effort to meet the system's long-term funding gap of approximately $20 billion. The biggest target allocation increase was to real estate, which will rise to 11 percent from 6 percent. Private equity and hedge funds will now receive a 9 percent target allocation, up from 6 percent. “[T]he new investment philosophy guiding the shift [is] unprecedented in CalSTRS' history,” said Christopher Ailman, CalSTRS' chief investment officer, in a statement.

AIG CLOSES CO-INVESTMENT FUND
AIG Global Investment Group announced the closing of its new $700 million (€550 million) co-investment fund, which will allow private equity fund investors to directly invest in what AIG claims will be “top-tier” buyouts. The fund had been targeted at $500 million, but raised commitments of $664.4 million from an investor base spanning Europe, Asia and the US. The AIG Employee Retirement Plan also invested alongside the fund to bring the total to $700 million. The co-investment program has already invested in 11 portfolio companies, including US consumer packaged goods seller Acosta and US-based JetDirect Aviation. Two more investments are set to close this quarter.

iCV CAPITAL CLOSES ON $313M
ICV Capital Partners has held a final close on its second investment fund at $313 million (€247 million). ICV II will invest in smaller middle-market companies with annual revenues ranging between $25 million to $100 million. The fundraising finished more than 1.5 times oversubscribed, exceeding its initial target of $200 million. Investors in the new fund include many returning investors from ICV's first fund such as CalPERS, Citibank, Fairview Capital Partners, Bank of America and New York State Common. New investors include the City of Philadelphia, Illinois Teachers, CSFB Emerging Opportunities Fund, Lehman Brothers, New York Life, CalSTRS, the State of Connecticut and CSFB/NJDI Investment fund.

CONNECTICUT LIFE SCIENCES FUND FINDS $375M
Thomas, McNerney & Partners, a Stamford, Connecticut-based venture capital firm, has raised $375 million (€292.7 million) for its second life science and medical technology fund. It comes on the heels of the firm's inaugural $216 million (€168.6 million) fund raised in 2002. The fund will provide capital in the $5 million to $40 million range to companies in all stages which need funds for commercialization, acquisitions, restructuring or consolidation. The firms will actively participate as lead investors in the partnerships.

MICRO FUND DRAWS MEGA LPS
The Riverside Company, a Cleveland-based private equity firm, announced the closing of its Riverside Micro-Cap Fund on $250 million (€197.3 million). The fund is aimed at acquiring micro-cap companies with revenues in the $5 million to $25 million range, with EBITDA of $3 million or less. Riverside co-CEO Stewart Kohl said his firm may hold individual portfolio companies for as many as seven to 10 years. Investors include clients of Massachusetts-based Meketa Investment Group, State of Michigan Retirement Systems, Dutch investment firm AlpInvest Partners, Menlo Park-based Makena Capital Holdings, RCP Advisors in Chicago, and Credit Suisse's Ohio Public Employee Retirement System/Ohio mid-west Fund.

BANK OF AMERICA EYES FUND
Bank of America, the second-largest bank in the US, is setting up a private equity fund to seek investors willing to invest $500,000 (€389,500) or more, up to a total of $1 billion (€779 million), according to an SEC form filed on August 9. The Boston-based fund will be known as BA Private Equity Direct, and was incorporated on May 6, according to the filing. Bank of America's larger rival, New York-based Citigroup, is reportedly in the process of raising a $3.5 billion (€2.7 billion) private equity buyout fund, an unnamed well-placed source told Bloomberg News in August.

LIME ROCK CLOSES $750M ENERGY FUND
Lime Rock Partners, a Connecticut private equity firm, announced the closing of its fourth energy-focused fund on $750 million, nearly as much as its three previous funds combined. Fund commitments came from 63 institutional investors, including endowments, foundations, and pension funds, with 95 percent coming from investors in previous Lime Rock funds. The firm's three previous funds have invested in 37 companies in the energy service, exploration and production, and oil service technology sectors in North America and Europe – a strategy which will continue with the new fund. The firm also manages a separate $450 million fund which directly acquires and operates US oil and gas properties. Lime Rock now manages $2.1 billion of private capital.

DE NOVO RAISES HEALTHY $300M
De Novo Ventures, the Menlo Park, California-based venture capital firm, announced that it had closed its third fund on $300 million (€235 million). It plans to continue to invest in the life sciences field, primarily in the western US. The firm plans to invest the fund over the next three years, said De Novo managing partner Fred Dotzler, with roughly half the investments in early-stage medical technology companies, one-quarter in mid-stage, and one-quarter in late stage. The new fund exceeds the $250 million the firm raised for its second fund in 2004, with which it invested in about 21 biotech and medical device companies. Investors in that fund, including the University of California, private equity firm Paul Capital, Goldman Sachs and JP Morgan, committed to the new fund as well.

GOLDMAN GOES FOR $10BN TARGET
Goldman Sachs is poised to raise a new global private equity fund, GS Capital Partners VI, which has a $10 billion target, according to media reports. A Goldman Sachs spokesman declined to comment. The new fundraising comes after Goldman Sachs' fifth global private equity fund closed on $8.5 billion last year. Goldman Sachs itself committed in excess of $2.5 billion, or 30 percent of GS Capital Partners V's total capital. Other investors in GS Capital Partners V are part of the firm's network of qualified institutional and high net worth clients.