Riverside to enter Iberian market

The US-based private equity firm is to expand its European activities with new offices in Spain and Portugal in 2006.

New York and Cleveland-headquartered private equity firm The Riverside Company is to make investments in Spain and Portugal from new offices in Madrid and Lisbon, PEO has learnt.

Managing partner Bela Szigethy told PEO that Riverside would be adding to its existing European offices in Budapest, Prague, Warsaw and Munich in a bid to create a pan-European buyout house focusing on the smaller end of the market.

Spain is a country where we should be able to close one deal a year, with Portugal [bringing in] one deal every two years if we’re being conservative.

Bela Szigethy, managing partner, The Riverside Company

Szigethy said: “The first stop in our Western roll-out will be the Iberian peninsula, most likely followed by Benelux and France”. He added that the firm had already been looking at Spanish deal flow and had retained a headhunter in order to “find the best people in the local market to join us”.

With better deal flow and more attractive opportunities, Madrid will be the first of the two offices to open. Szigethy said that he would be disappointed if it was not up and running by the end of the first quarter of 2006, run by a Spanish native.

As for Portugal, Riverside feels that it already has a connection, with Szigethy pointing out that managing partner Antonio Cabral, head of the firm’s European effort, is Portuguese by heritage.

Although the firm is yet to close any deals in the Spanish market, Szigethy said that opportunities there have so far been sourced by two members of the European team, one of whom was currently finishing an MBA in Barcelona. “We probably saw about 25 deals in Spain last year, some of which were quite interesting, and we’re still working on a couple of them,” he added. “Spain is a country where we should be able to close one deal a year, with Portugal [bringing in] one deal every two years if we’re being conservative.”

Riverside’s most recent European acquisitions were Sentinel, a UK producer of branded residential heating system additives and chemicals in June; Welltech, a Danish provider of intervention tools and services for the oil and gas industry, in July; and Computer Press, a computer books and magazine publisher in the Czech and Slovak markets, in June.

The firm’s two previous European funds are now fully invested, although there is cash available in the vintage 2002 Riverside Europe Fund II for add-ons, said Szigethy. He declined to comment on any current or future fundraising efforts.

Focused on acquiring small-to-medium sized business with EBITDAs of €2m to €10 million, Riverside’s activities in Europe began in 1990, providing advisory services to assist clients in privatising and restructuring companies in Central Europe. The first European fund was raised in 1997, and the firm has invested in 13 companies since. The European team currently number 23, including 11 investment professionals.