The Oregon Investment Council approved a $75 million commitment to The Riverside Company’s Capital Appreciation Fund VI last week, according to a spokesperson.
Riverside is targeting $1 billion with a $1.5 billion hard-cap for its latest vehicle, which will invest in 20 to 30 lower mid-market companies, according to Oregon documents. The generalist Fund VI will target companies with less than $25 million EBITDA, then build them up through operational improvements in addition to organic and acquisition oriented growth.
Probitas Partners has been hired as a placement agent for Fund VI, according to Oregon documents.
Riverside recently increased the fund’s hard-cap from $1.35 billion to $1.5 billion and lowered its management fee from 2.25 percent to 2 percent, according to Oregon documents. A source with knowledge of the fund previously told Private Equity International that the fee breaks apply to all Fund VI LPs.
Riverside’s previous Capital Appreciation fund – a 2008 vintage – is considered third quartile, according to Oregon's investment consultant TorreyCove Capital Partners and Thomson Reuters rankings, though investments in the fund are still relatively young to fully gauge performance. Fund V had generated an 8.7 percent net internal rate of return and 1.21x multiple as of 30 June, according to Oregon documents. The firm's prior funds are considered top quartile by TorreyCove and Thomson Reuters, the documents said.
“Staff and TorreyCove believe that such performance assessments are premature as the average age of Fund V portfolio company investments is only two years,” according to Oregon documents. “When investing in smaller, less stable companies during a deep recession, Riverside’s short term performance will be more negatively affected than their middle market peers investing in larger, more stable companies.”
The Riverside Company was founded in 1988 and manages more than $3 billion in assets.