Pre-Marketed Funds “Officially” Enter Market

Firm: Mason Wells

Fund: Mason Wells Leveraged Buyout Fund III LP

Target: $250 million

Firm: Riverside Partners

Fund: Riverside Fund IV LP

Target: $250 million

Dismal third quarter fundraising totals revealed that buyout firms that don’t need raise money aren’t. Meanwhile, some of the firms that are braving the fundraising market are cautiously doing so by ‘premarketing’ their funds for significant periods in order to gauge investor appetite before officially kicking off the time-intensive practice of full-on fundraising. For some of those firms, the time has come to officially enter fundraising mode.

Mid-market firms Mason Wells and Riverside Partners officially began fundraising after protracted periods of “testing the waters” by rounding up soft commitments from investors, according to PeHUB, a sister publication of Buyouts.

Mason Wells, based in Milwaukee, had been “beating the trees” with word of its third fund for more than a year before “officially” coming to market two to three weeks ago, a source said. The firm seeks to raise $250 million with a $300 million hard cap on Mason Wells Leveraged Buyout Fund III LP. It plans a first close in the first quarter of 2010. In 2006, Mason Wells topped its $250 million target with a $300 million fundraise to continue its strategy of investing in engineered products and services, specialty packaging and paper and outsourcing businesses in the upper Midwest. The firm used Forum Capital as a placement agent for that previous effort. Mason Wells did not return calls by press time.

Riverside Partners, meanwhile, pre-marketed its fourth fund for almost a year before entering the market four months ago. As of July, the firm was nearing a first close on Riverside Fund IV LP, which has a $250 million target, a slight increase from the firm’s $225 million third fund that closed in 2006. The Boston firm specializes in investments in the health care and technology sectors, specifically seeking companies with annual revenues between $10 million and $100 million.