The fundraising spree seeing equity and credit funds alike raise record sums soldiers on with Riverside Company’s fund closing last week. Riverside Credit Solutions (RCS) raised over $280 million for its latest incarnation, a small business investment company that will deploy equity alongside government-backed Small Business Association debentures.
“We believe RCS is uniquely positioned to support our private equity clients and portfolio companies through the team’s decades of experience investing and managing credit portfolios through multiple cycles,” says managing partner David Dobies.
The raise comes as a secular increase in private equity demand for private credit has arguably been stoked by recent war-induced market volatility. Thoma Bravo reportedly turned to Blackstone Credit, Golub Capital, Owl Rock Capital and Apollo Global to finance its $10.7 billion proposed acquisition of Anaplan because the target’s negative cash flow was a hard sell to banks in a rising interest rate environment.
Those conditions could prove lucrative for niche credit providers like RCS. Target sectors for the freshly raised fund include Business Services, Software & IT Services, Healthcare, Specialty Manufacturing, Consumer Goods, Education & Training, and Franchising.
“Within these industry verticals,” says Tom Gillis, a partner at Riverside Credit Solutions (RCS), “RCS focuses on established business models, with strong free cash flow characteristics and proven management teams seeking to build a well-diversified portfolio that can weather market fluctuations.”
That strike zone centers on companies generating $35 million in Ebitda or less with operating teams looking for flexible financing solutions. Sources previously told me the lower middle-market is more insulated from current market chop, but continued fundraises and credit provision indicates private credit continues to be in demand.