Riverside Partners launches Fund V with $500m target

The Boston-based mid-market investor expects to hold a final close in the first quarter of 2012, which would pair the fund with other lightning-quick fundraises like that of TSG and HitecVision.

Riverside Partners, a Boston-based firm that invests in mid-market healthcare and technology companies, has launched its fifth fund, targeting $500 million, according to a person with knowledge of the fund.

The firm, which was established more than 20 years ago, set the hard-cap on Fund V at $650 million, and has indications of about $1 billion of interest in the fund from potential limited partners, the person said. The firm expects to hold a final close in the first quarter of next year.

Riverside Partners has been producing around a 3.9x return multiple on realised investments over its 20 year track record, the person said.

Riverside declined to comment. Atlantic-Pacific Capital is working as the global placement agent for the fundraising, and also raised the firm’s prior fund, which closed last year on $406 million, beating its original target of $325 million.

A first quarter final-closing would make the marketing period one of the fastest this year, putting it alongside other lightning quick fundraises like that of TSG Consumer Partners, which closed its sixth fund in November on $1.3 billion in 60 days, and Norwegian firm HitecVision, which took four months to raise $1.5 billion.

A trend has emerged in the tough fundraising environment in which firms that have produced consistently solid returns for LPs have been able to secure re-ups from the bulk of their existing investors, making it easy to hit target amounts.

Firms that have underperformed or have had other issues of concern to investors are having trouble hitting their targets. One example of this is WL Ross & Company, which has been raising its fifth fund for more than a year with a $4 billion target, but had only collected about $450 million as of 12 August, according to documents with the US Securities and Exchange Commission. While Ross’ funds have performed well, LPs are concerned about the strength of the next generation of leaders at the firm.

Not that this is a necessarily new trend, but one that has become more pronounced as limited partners either have less money to commit, or have become much more selective in their choice of managers.