PE fund briefs, week of Aug. 10, 2009

Riverside nears first close on latest fund

Riverside Partners plans to hold a first close on its fourth fund in the coming weeks, according to a source familiar with the situation.

The fund, Riverside Fund IV, has a target of $250 million, which is a slight increase from the Boston-based shop’s $225 million third fund, which closed in 2006. Fund III was targeted at $175 million.

The firm declined to comment.

Fund III received pledges from Abbott Capital Management, Hartford Investment Management, the Massachusetts Institute of Technology, The Investment Fund for Foundations and MN Services.

Riverside Partners, founded in 1988, invests in the health care and technology sectors. Its transactions include partial and complete buyouts, recapitalizations, growth equity deals, divestitures, take-private transactions, and strategic add-on deals.

Recent activity includes a growth investment in Vocollect Inc. in July, and an add-on acquisition of Renewable Power Systems by portfolio company Alteris Renewables in June. —Erin Griffith

Audax pushes back its next buyout fund

Audax Group is opting to wait until at least the fourth quarter to begin raising its fourth buyout fund.

Co-CEO Geoff Rehnert said the Boston-based shop made the decision because it hasn’t deployed enough of its current fund, Audax Private Equity Fund III, to justify raising another. Even after doing 10 add-on transactions this year, fund III is only about 50% deployed. That means the firm is sitting on about $500 million of the $1 billion pool, which closed in 2007.

Rehnert wrote in an email: “Last fall, we anticipated we would be further along investing fund III at this point in time, but our investment pace has slowed as credit tightened and deal activity has slowed.” The fourth fund is expected to have a similar target to its predecessor.

Rehnert said Audax anticipates it will have deployed at least 75% of fund III by the fourth quarter.

Audax’s mezzanine practice, on the other hand, is going full speed ahead. Audax Mezzanine Fund II has deployed more than 70% of its $700 million in capital, and the firm is currently in the market for a third fund with a $750 million target. Audax anticipates a close on the vehicle in the fourth quarter.

Audax’s first buyout fund, Audax Private Equity Fund I, a 2000 vintage, has posted a return of 1.6x with a 13.9% IRR, according to the California Public Employees’ Retirement System. —Erin Griffith

Corsair seeks $2B for fourth financial services fund

Corsair Capital has launched fund-raising efforts for its fourth financial services investment fund, and the firm is looking to almost double the amount it raised for its prior vehicle.

The New York-based firm hopes to hold a first close this fall between $600 million and $700 million, eventually hitting the fund’s target at $2 billion.

“The PPMs have just gone out, the firm has done a bunch of meetings both with existing and new backers, and the fund is being very well received,” said a source with knowledge of the situation.

Potential supporters are expressing interest and discussing the timing of pledges, although no investor has signed on yet to Corsair IV Financial Services Capital Partners, the source said.

The firm raised $1.1 billion for its third fund, which closed in 2007, and which invested in banks, insurance companies and advisory firms. Backers of fund III included General Electric Co., NB Private Equity Partners Ltd. and Standard Chartered Bank.

J.P. Morgan & Co. formed Corsair Capital in 1993 to take advantage of opportunities created by the savings and loan crisis. The firm managed two third-party funds from within J.P Morgan and then spun out from the investment bank in 2005.

Atlantic-Pacific Capital, a Greenwich, Conn.-based placement agency, is helping to raise the new fund. —Nancy Gordon

Shanghai sets up finance-focused PE fund

Shanghai has set up China’s first private equity fund devoted to investment in financial companies, Chinese media reported last week.

Shanghai Financial Development Investment Fund will invest in financial startups not only in Shanghai, but also around China, the Shanghai Securities News said. The Shanghai Fund, managed by the Jinpu Industrial Investment Fund Management Co., aims to raise $2.9 billion. —Reuters