River Associates Eyes Fund VI, May Hire Agent

Firm: River Associates

Fund: River VI LP

Target: $125-150 million

Executives at River Associates Investments LLC, a lower mid-market shop, are plotting their sixth buyout fund and expect to start raising money in 2009, a source familiar with the firm’s strategy told Buyouts.

Planning for the fund is still in the early stages, but our source said he expects the Cahttanooga, Tenn.-based firm to set a target in the range of $125 million to $150 million. Executives expect to be able to promote a gross internal rate of return of almost 35 percent over an 18-year period. It will consider hiring a placement agent.

The shop is currently investing from its fifth fund, the $110 million River V LP, raised in 2006 and about 40 to 45 percent invested, our source said. The firm is not planning on hiring any more investment professionals for the fund.

River Associates, which typically funds its deals with 40 percent to 45 percent equity, typically acquires North American companies generating adjusted operating income ranging from $2 million to $10 million in manufacturing, distribution, industrial services and retail businesses, among other industries. At present the firm has a specialty apparel business and an outsourcing services company under of letter of intent.

The firm also is seeking add-on deals for Coining Inc., a Saddle Brook, N.J.-based company that makes metal products used in the packaging and assembling of microelectronics; Lucent Polymers, an Evansville, Ind.-based company that produces resin compounds for the industrial, consumer and automotive markets; Roscoe Medical, a Strongsville, Ohio-based distributor of respiratory supplies and replacement parts to the home health care market; Spectrum Corp., a Selmer Tenn.-based company that prepares and markets specialty oils used in power lawn and garden equipment; and Wheaton Industries, a Millville, N.J.-based company that makes scientific laboratory equipment.

George Pettway, an advisory partner, founded River Associates in 1990.