Private equity firm the Riverside Co. has closed a $1.5 billion fund, the largest fund the firm has closed to date.

The fund, called Riverside Capital Appreciation Fund VI, closed 50 percent above its $1 billion target. Riverside Capital will make investments in the lower end of the middle market, targeting acquisitions of North American companies valued at up to $250 million and with Ebitda between $5 million and $25 million. The fund took Riverside just over a year to close, according to Riverside chief operating officer Pam Hendrickson.

Investors include clients of Altius Associates Ltd., clients of GCM Customized Fund Investment Group LP, Florida State Board of Administration, Makena Capital, the state of Oregon, Employees Retirement System of Texas and Washington State Investment Board. Riverside employees committed about 4 percent of the fund.

Riverside has already made investments from the fund, including Rutland Plastics, which it bought in September, and Paradigm Tax Group, which it bought in November. 

“The fundraising environment has gotten considerably tougher over the 25 years we’ve been in business,” says Riverside Co-CEO Béla Szigethy in a statement. Riverside’s previous fund closed in 2009 with $1.17 billion, 30 percent above its $900 million target.

“We started fundraising that fund in 2008, so the whole environment was very challenging, with all kinds of people either not having any money or being very frightened to invest in anything other than their pillowcases. The environment changed, overall things have gotten better,” says Hendrickson. “Investors have become increasingly attracted to the middle market.”

“There is no question that fundraising is difficult, not quite as difficult as it was in 2008 and 2009, but it is no cakewalk,” says Hendrickson. 

The firm won Mergers & Acquisitions Mid-Market M&A Award for Private Equity Firm of the Year for 2012, after completing its 300thtransaction. In 2013, the firm continued to churn out deals. In December, Riverside bought Mercareon to add to portfolio company Transporeon. Also in December, the firm bought Hytec Geratebau GmbH as an add-on acquisition for data-transmission system manufacturer Keymile. In November, the firm bought Y. International, a Tokyo-based bicycle retailer. 

 

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