Riverside Secures Added $50M For North American Fund

The Riverside Company has surged past its target for its latest North American buyout fund, which it expects to close May 31, according to sources close to the effort. The lower mid-market buyout specialist has raised $950 million, $50 million more than its original target, the source said.

That means the New York-based firm has raised roughly $50 million since January, when Buyouts reported it had reached its target. Riverside began raising the fund early last year, and the fund’s hard-cap is $1.25 billion.

Riverside Capital Appreciation Fund V LP has a management fee of 2.25 percent, a 25 percent carry fee and an 8 percent preferred return fee. If the fund does not return 2x its investors money, profits are refunded to limited partners to the point that either their returns equal 2x or Riverside’s carry works out to 20 percent.

Riverside professionals managing the fund are targeting companies with enterprise values under $150 million that are generating annual EBITDA in the $5 million to $15 million range. The North American team has made two deals so far this year. First, it purchased Sencore Inc., a Sioux Falls, S.D.-based electronics company, in late January. Then, on April 2, it announced the add-on acquisition of Blendco Systems LLC, a Bristol, Pa.-based cleaning products producer, by portfolio company DuBois Chemicals. Riverside is also in the market with its fifth European buyout fund, Riverside Europe Fund IV, which is pursuing an identical strategy there.

The firm’s success, amid the dourest fundraising environment in recent memory, likely is a product of its strong track record. Riverside’s previous North American fund, the $750 million Riverside Capital Appreciation Fund 2003, has generated an IRR of 19.2 percent and an investment multiple of 1.43x as of March 31, 2008, according to information supplied by the Oregon Public Employees’ Retirement Fund.

Since 1988, the firm has invested in 213 transactions with an enterprise value of $4.7 billion. Riverside has a senior professional staff of 22 and more than 170 other professionals in seven offices in the United States, as well as bureaus in Amsterdam, Brussels, Budapest, Madrid, Munich, Prague, Seoul, Stockholm, Tokyo, and Warsaw.

Officials at the firm declined to comment.