Riverside closes lower middle-market fund at $1.5 billion, well above target

Firm: The Riverside Company

Fund: Riverside Capital Appreciation Fund VI (RCAF VI)

Target: $1 billion

Amount raised: $1.5 billion

Placement Agent: Probitas Partners

Following in the footsteps of the $1.2 billion, vintage 2009 RCAF V, Riverside Capital Appreciation Fund VI is earmarked for North American businesses with enterprise values up to $250 million and generating EBITDA of between $5 million and $25 million.

The fund series remains North America-focused, but Riverside Co also invests throughout Europe and the Asia-Pacific region.

The RCAF fund team, led by Managing Partner Suzanne Kriscunas, drew limited partners investments from clients of Altius Associates Ltd., clients of GCM Customized Fund Investment Group LP, Florida State Board of AdministrationMakena Capital, the State of Oregon, the Employees Retirement System of Texas and the Washington State Investment Board, according to Riverside Co. New investors comprised more than 40 percent of total limited partner commitments, the firm said.

Riverside Co’s employees pledged about $60 million to RCAF VI, the firm’s largest general partner dollar commitment amount to date.

Co-CEO Bela Szigethy told Buyouts the fundraising effort lasted about a year. The firm has already made two investments from Fund VI, in Rutland Plastics and Paradigm Tax Group.

“We’re not going to change our stripes—we’re still focused on small deals,” Szigethy said. “Our bread and butter are companies with about $17 million to $20 million in EBITDA.”

The firm, which maintains its largest offices in Cleveland and New York, has a headcount of about 230 but will increase that number over time, with a greater emphasis on operating professionals, Szigethy said.

Riverside Co intends to maintain its pace of about 30 to 50 deals a year, including acquisitions and exits, he said.

Riverside Capital Appreciation Fund V had delivered an IRR of 7.4 percent as of Sept. 30 for the Oregon Public Employees Retirement Fund, according to data from the pension fund compiled by Buyouts.