Riverside micro-cap fund grows to $650 mln, ahead of target

Riverside Co closed its fourth micro-cap fund at its hard cap of $650 million, 30 percent ahead of its $500 million target, with participation from at least one new anchor LP, among others.

Riverside Micro-Cap Fund IV plans to keep its deal size for companies below $7 million in EBITDA, in line with Fund III, but it’ll add more transactions, said Loren Schlachet, a managing partner and manager of the fund.

The larger fund size may help the firm space out its funding to every three to four years, versus past funds, which hit the fundraising trail roughly every two years, he said.

The vast majority of LPs from Fund III also invested in Fund IV, including Makena Capital, clients of Partners Capital Investment Group, and State of Michigan Retirement System, he said.

Clients of Willis Towers Watson, the consultants in risk management, human resources and reinsurance, marked a new LP in the fund, he said.

“We have a nice proportion of pensions, endowments, high-net-worth individuals and insurance companies, as well,” Schlachet said.

The fund has already made two platform investments: Kasasa by BancVue, a financial technology and marketing services provider based in Austin, Texas; and Dermatology Group, which runs skin-treatment centers in New Jersey.

Riverside Co closed Riverside Micro-Cap Fund III in 2014 with $350 million in commitments, plus an additional $150 million from the U.S. Small Business Administration for a total of $500 million. The firm didn’t get any commitments from the SBA for Fund IV but it could do so again in the future.

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