Chicago, Illinois-based buyout fund Baird Capital Partners purchased two automobile auction companies, Charleston Auto Auction and Rea Brothers Mid-South Auto Auction. The two target companies are based in Moncks Corner, South Carolina and Pearl, Mississippi, respectively. Terms of the transaction were not disclosed.

The companies were rolled into American Auto Auction Group, a new holding company led by Steve Simon, former chief executive officer of Auction Finance Group. In addition, A.J. Wasserstein, an operating partner at Baird Private Equity, will serve on the company’s board of directors. Charleston Auto Auction and Rea Brothers’ founders will exit the business in a liquidity event, though the company’s general managers will remain with the new company.

Randy Mehl, a partner at the firm, led the transaction for Baird Capital Partners. The firm is the US affiliate of Baird Private Equity, which is the buyout firm of Robert W. Baird & Co. In speaking with Mergers & Acquisitions, Mehl said the car auction industry is “a stable, growing market.” He estimated that the market is growing about 4 to 6 percent annually.

The new company will pursue additional add-on acquisitions. Mehl estimated that the auto actions company will complete acquisitions of “between 3 to 5 businesses each year.”

Approximately half of the industry is controlled by two companies; Manheim, a Atlanta, Georgia-based company, and by Cox Communication.

The auto auction industry has recently attracted increased interest from financial buyers. Last month, Clayton, Dubilier & Rice purchased the European remarketing company BCA from Montagu Private Equity.

Baird is currently investing out of its fourth fund, Fund IV, with $300 million in committed capital. In March 2007, Baird closed the fourth fund.

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