Riverside Fundraise Warms Market

Firm: Riverside Partners

Fund: Riverside Fund IV

Amount Raised: $406 million

Target: $325 million

Placement Agent: Atlantic Pacific Capital

When Boston-based Riverside Partners entered the market with its fourth fund in March, it was prepared for the worst. But with the help of placement agent Atlantic Pacific Capital, the firm closed at its hard cap of $400 million in just under eight months. When another $6 million in general partner commitments are factored in, the fund tops out at $406 million.

General Partner David Belluck said the decision to increase fund size—the firm’s predecessor fund was $225 million—made sense after building up Riverside Partners’s team and investment pace over the past several years. But the process wasn’t as simple as with past funds.

“In 2008, we thought we’d have a fast fundraising with tremendous support and raise it all from existing investors,” he said. “Then you saw what happened in Q4 [2008] and Q1 of 2009.” Because there was so much uncertainty in the economy, and investor sentiment had soured toward private equity, Riverside decided to hire Atlantic Pacific Capital, a placement agent it had not previously worked with.

The decision proved to be a wise one: Atlantic Pacific introduced the firm to a broader set of investors. Where past Riverside Partners funds were made up of North American university endowments and foundations, the new vehicle includes commitments from public pension funds, funds of funds and European investors. Yale University and Massachusetts Institute of Technology remain among the firm’s lead investors.

In addition to raising its fourth fund, Riverside Partners spent 2009 doing deals; the firm completed 12 last year, leaving its third fund fully deployed. One deal, an investment in voice-assisted work system provider Vocollect, used capital from the new fund. Belluck said the firm is likely to continue its dealmaking pace in 2010, as it is too early to focus on exits from companies in Fund III, and Fund II is fully realized.

Riverside Partners invests in health care and technology companies generating EBITDA of $5 million to $25 million on revenues of $20 million to $200 million.