Riverwood Capital Halves Target On Debut Fund

The story of a buyout fund lowering its target is getting to be a familiar one.

Now Riverwood Capital, a middle-market shop concentrated on the tech sector, is joining the ranks. The firm has shaved the goal for its debut fund from $1.5 billion to “around $750 million,” according to a source familiar with the situation. Riverwood Capital, which has offices in Menlo Park, Calif., and New York City, entered the market with high hopes in October.

Firms lowering targets of late have come in all shapes and sizes as limited partners, squeezed by the denominator effect and a drop-off in distributions, have pulled in the reins on their commitments. The list of firms cutting back fund targets includes mega-shops like The Blackstone Group and Madison Dearborn, as well as mid-market players such as Thoma Bravo.

This is not Riverwood Capital’s first time in the market. According to trade reports, the firm raised $200 million from wealthy individuals in 2007 under its previous name, “Bigwood Capital.” The majority of that sum has been invested, one report stated. Michael Marks, the former CEO of global electronic manufacturer Flextronics International, and former senior advisor to KKR, founded the firm in 2007, later recruiting Christopher Varelas, the former co-global head of tech media and telecom investment banking for Citigroup. Riverwood Capital intends to invest in growth equity investments in the technology hardware and related services businesses.

The firm invested $13 million in Globant, a Latin American software product developer, R&D, and IT maintenance outsourcing business, in December. It made that investment alongside venture firm FTVentures.

Marks did not return calls seeking comment.