Riverside in big exit, micro deal

The US smaller middle market-focussed private equity firm has returned 4.8x its investment in Universal Air Filter while investing in GTI Diagnostics through its micro-cap fund.

The Riverside Company has continued its fast pace of investment activity with a smaller mid-market exit from Universal Air Filter Company. The New York-based firm also announced its 14th investment of the year in GTI Diagnostics.

Despite a global economic turndown, Riverside is on track to match or exceed last year’s total of 29 investments.

Riverside initially invested in Universal Air in December 2005 through the Riverside Capital Appreciation Fund 2003 which closed on $750 million in 2004. The company was a “clear leader in the market” at the time of investment, said partner Will Bixby.

The firm encouraged Universal Air’s management team to broaden its customer base and increase its focus on repeat business. Riverside also helped management open an office in China where an increasing number of the company’s customers are located.

Universal Air had not seen its growth affected by the slowing economy and Riverside received “an enormous amount of interest in the company” before selling to private equity firm Thompson Street Capital Partners, said Bixby.

Riverside acquired GTI Diagnostics out of the firm’s $250 million debut micro-cap fund. GTI produces medical testing equipment for the in vitro diagnostics industry.

“They had a very full product pipeline of new products to be introduced over the next several years,” said managing partner Loren Schlachet of the primary rationale for investment. Approximately 10 products are currently in various stages of development.

The firm will grow GTI organically and through acquisitions over the course of a seven to 10 year holding period.

Riverside has nearly $2 billion (€1.3 billion) in commitments across nine funds. The firm invests in the US, Europe and Asia from its 17 offices worldwide.