Riverside opens Singapore office(2)

The mid-market firm has opened its fifth Asia-Pacific office and is looking for opportunities in Southeast Asia and Greater China for the first time.

The Riverside Company has opened a Singapore office and will now include Southeast Asia and Greater China in its Asia investment strategy, co-chief executive of the firm Béla Szigethy revealed to Private Equity International. He said the firm is responding to its existing and potential LPs' calls for exposure to certain Asian markets, in particular Southeast Asia. 

“[We] are taking a hard look at Malaysia and Indonesia, in addition to Singapore,” Szigethy said. 

In addition, the firm has had a Hong Kong office from which and it now intends to look for opportunities in China and Taiwan.

The Singapore office employs two full-time professionals to help source deals in Southeast Asia. Szigethy admits the firm is new to the region, but is not put off by the high asset valuations in countries like Indonesia and Malaysia. 

Expanding
in Asia

“They certainly tend to be healthy valuations, particularly in the education and healthcare sphere. But you have to get beyond the simple multiple and really get into the company and see what you can do with it,” he says. “We can hopefully bring something to that company that it didn’t have before, so we might end up paying 8x or 9x EBITDA, which might be considered `too high’, but if we can make a great return with that then it doesn’t matter.’

Previously the firm invested only in the more developed economies in Asia-Pacific such as Australia, Japan and Korea.

“If we’re going to be in Asia, we’re not going to just stay in these mature economies when there is all this growth

[We] are taking a hard look at Malaysia and Indonesia, in addition to Singapore.

Béla Szigethy

[elsewhere],” Szigethy explained. “[We like] the dynamism of the region, the wonderful work ethic of the people and the rising levels of GDP per capita that are coming into the range where consumer spending picks up significantly.”

Riverside is a mid-market firm that focuses on healthcare, education, consumer products and manufacturing, among other sectors. It invests in businesses worldwide with EBITDA of approximately $5 to $25 million, which will be the same when investing in developing countries in Asia. 

Currently, it is raising a $150 million Asia fund – its second in the region, which had a first close on $70 million before the end of 2012, according to PEI’s Research & Analytics division.