Firms & Funds

RiverGlade, healthcare spinout from Sterling Partners, hits market with debut fund

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Illinois teachers, TRS, private equity, Astorg, TSG
People walk by the snow-covered Cloud Gate sculpture (also known as The Bean) in Millennium Park in Chicago on Dec. 13, 2016. REUTERS/Kamil Krzaczynski
  • RiverGlade formed by Sterling Partners healthcare executives
  • Danny Rosenberg, Garrick Rice left earlier this year
  • Debut fund targets $300 mln

Two healthcare-focused executives from Sterling Partners have formed RiverGlade Capital, which has hit the market with its debut fund.

The Chicago firm’s first fund is targeting $300 million with no cap, two limited partners with knowledge of the firm said. The fund will target healthcare-related investments in the lower middle market, they said.

Former Sterling Managing Directors Danny Rosenberg and Garrick Rice launched RiverGlade this year. Sterling Partners announced the departures earlier this year and also said the firm would not raise a new flagship vehicle.

“Danny and Garrick have our full support and sponsorship and we will do everything possible to assist in their success,” Sterling Partners Chairman Steven Taslitz said in a Jan. 31 letter to LPs.

Rosenberg worked at Sterling from 1999 to February 2017, and Rice worked at the firm from 2001 to February, their LinkedIn profiles say.

Rosenberg is on the board of Adeptus Health, which Sterling Partners created in 2013 as a holding company to own and operate First Choice emergency rooms, regulatory files said. Adeptus filed for bankruptcy in April.

Sterling Partners, formed in 1983, decided to forgo a fifth fund, instead moving forward on a deal-by-deal basis. The firm’s most recent fund, Sterling Capital Partners IV, which closed on $917 million in 2013, was generating a 1.08x total value multiple as of February, performance information from New Jersey Division of Investment shows.

“We see increased competition weighing on returns, heightened regulatory and tax friction, and less flexibility to operate in what we believe to be the most prudent manner,” Taslitz wrote in the Jan. 31 letter.

“The challenges are particularly acute within a fund model for the types of business models we view as our specialty and at times does not align well with a middle-market buyout environment that relies heavily on high levels of leverage to ‘pay up’ in competitive auctions and ultimately to generate returns.”

Action Item: Sterling Partners’ Form ADV: http://bit.ly/2kwWxei

People walk by the snow-covered Cloud Gate sculpture (also known as The Bean) in Millennium Park in Chicago on Dec. 13, 2016. Photo courtesy Reuters/Kamil Krzaczynski