Waud Up! Chicago Firm Cements Presence W/Fund III

Waud Capital Partners greatly expanded its base of investors with more large state pensions and international investors with its third and latest fund, cementing the Chicago-based shop’s presence in the industry and positioning it for further growth with successive funds.

The firm closed Waud Capital Partners III LP at $463 million, easily surpassing its target of $350 million. Reeve Waud, who founded the firm in 1993, said the firm could have raised as much as $200 million more.

Though every fund is important for buyout shops, fund III is particularly critical as it separates transitory shops with mixed records from those investors believe will be in business for a long time.

Waud Capital has grown from around five investment professionals at its inception to 13 today, and its executives expect a number of junior professionals to advance to the partner level. The firm raised $115 million for its first institutional fund in 1999, $315 million for its second fund in 2005, and today manages approximately $1 billion.

Still, Waud said the firm remains committed to sticking to small mid-market buyouts focused on backing strong management teams. “You don’t want to dumb down the alpha,” Waud said.

Read more about the Waud fund and the firm’s interesting lineage (hint: Three execs from another venerable Chicago shop are investors, while the co-founder of yet another Chicago firm is on the advisory board), see my Buyouts article.