Waud closes Fund III on $463m

The mid-market firm, which beat its target, makes a significant GP commitment to all its funds, something LPs appreciate, says founder Reeve Waud.

Chicago-based mid-market firm Waud Capital Partners, which has held a final close on its third fund on $463 million, always makes the largest commitment to its own funds, according to firm founder Reeve Waud.

For all three of its funds, the firm's managers and their families have made the most significant contributions out of all limited partners, Waud said.

“That's something that's very significant to our LPs,” he said.

LPs showed their appreciation by helping Waud bust through its target on Fund III, originally set at $350 million. The firm reached that target shortly after its first close in August after only three months in the market. The firm decided to keep the fund open to April to allow time for “strategic investors” to make commitments, Waud said.

Reeve Waud

Waud Capital Partners III received re-up commitments from a “majority” of its existing limited partners. The fund attracted a group of about 30 new investors, including domestic and international pension plans, foundations, family offices and high net worth individuals. The fund has about 70 LPs in total, including the GP.

WCP III will invest between $20 million and $100 million in companies in the healthcare services, business and consumer services, specialty distribution and select industrial sectors.

LPs were also attracted to Waud's strategy, which is focused on the lower mid-market, and involves meeting a management team with significant experience in an industry and backing the team, Waud said.

The firm uses a three-phase process in its investments: the firm identifies an industry with attractive characteristics, then picks a management team with experience in that industry and makes one or two small acquisitions. The firm's investment with the management team is committed over time, rather than all up front, Waud said.

“We scale our capital,” Waud said. For example, the firm made a commitment to invest $40 million in the creation of CarePoint Partners, to operate a network of pharmacies in North America. The firm teamed with an executive

We scale our capital.

Reeve Waud

named Dana Soper to be chief executive officer. Since the initial investment three years ago, the company has made 12 acquisitions, has grown its employee base and the firm has only spent $15 million of the $40 million investment, Waud said.

Waud's investment process was something that made Fund III attractive to LPs, Waud said. “That was a key differentiator for our investors,” Waud said.

The firm’s previous vehicle closed on $315 million in 2005. Waud Capital was founded in 1993 and raised its $115 million debut fund in 1998.

Monument Group worked as placement agent for the fundraising.

Christopher Witkowsky contributed to this report.