The Riverside Company has completed fundraising for Riverside Micro-Cap Fund III (RMCF III). The fund was oversubscribed and closed at its hard cap of $350 million in capital commitments. As a Small Business Investment Company (SBIC), RMCF III will combine its private capital with up to $150 million from the US Small Business Administration for a total fund size of $500 million.
“RMCF III attracted huge interest. Not only was the fund meaningfully oversubscribed, but we received commitments for the whole fund just five months after launch,” said Riverside Co-CEO Stewart Kohl. “The RMCF team has performed very well and was rewarded by investors for that performance.”
Some of RMCF III’s investors include BMO Harris Bank, Clients of Cliffwater, Makena Capital, Clients of Meketa Investment Group, Clients of Partners Capital Investment Group, and the State of Michigan Retirement Systems.
“RMCF is a very differentiated fund with a strong track record,” said Erick Bronner, Global Head of Fundraising and Investor Relations. “We are very pleased with the support we received from existing and new investors, which enabled us to conclude the fundraising very quickly.”
Like prior funds, RMCF III looks to make control buyouts of companies with up to $5 million of EBITDA. Both RMCF I and RMCF II are top-performing funds per Cambridge Associates’ benchmarks. Thanks to its performance in growing small businesses, RMCF II was recently recognized by the SBA as SBIC of the Year.
“Focusing on the smallest ‘micro’ deals was a fairly risky proposition back when RMCF started,” said Riverside Co-CEO Béla Szigethy. “Over time, our strong team has shown how careful investing and world-class operational resources can supercharge growth at these little companies.”
The RMCF fund family was launched in 2005. Since then, the RMCF team has acquired 80 companies (39 platforms, 41 add-ons) and exited 12 portfolio companies. RMCF’s investment strategy is to drive significant improvements in companies’ operations, management teams, pricing and/or infrastructure and is seeks to grow EBITDA both organically and through add-on acquisitions.
“We love working with the entrepreneurial owners that we often encounter in micro-cap companies,” said Fund Manager Loren Schlachet. “By partnering with us, they gain access to institutional-quality resources and decades of management experience. These owners often retain a meaningful stake in their business and are well-aligned with us to bring their company to the next level. We’ve already made investments in RMCF III, and we’re excited about continuing to deliver strong returns for our investors and our partners.”
The close of RMCF III comes on the heels of two other recent fund closings. Like RMCF III, both Riverside Capital Appreciation Fund VI (RCAF VI) and Riverside Asia-Pacific Fund II (RAF II) closed well above their targets receiving strong support from Riverside’s investor relationships.
The Riverside Company is a private equity firm focused on the smaller end of the middle market (“SEMM”). Riverside specializes in investing in SEMM companies (those valued up to $250 million) and partners with management teams to build companies through acquisitions and value-added growth. Since 1988, the firm has invested in more than 340 transactions with a total enterprise value of more than $6 billion. The firm’s current portfolio includes more than 70 companies. The Riverside Company is headquartered in New York with additional offices in Atlanta, Chicago, Cleveland, Dallas, Los Angeles, San Francisco, and London (www.riversidecompany.com).
2014 PEPD • Private Equity’s Leading News Magazine • 7-14-14