Lower middle-market private equity firm River Associates Investments has closed its sixth fund, River VI, with $222 million. The firm says it’s original target was $200. The fund comes in at double the previous $110 million fund. Tennessee-based River Associates was formed in 1989.
River Associates Investments (“River Associates” or “RAI”), a leading lower middle market private equity firm, today announced the final closing of its sixth investment fund complex. River VI, with $222 million in commitments, exceeded its initial target of $200 million and is more than twice as large as River V, which was a $110 million fund.
River Associates received strong support from its existing investors, with almost all of them making a capital commitment to River VI. In addition, River VI attracted an impressive list of new investors including internationally recognized insurance companies, endowments, pension plans and private equity fund-of-funds. As they have in prior funds, the partners of River Associates made significant personal capital commitments to River VI.
River VI will continue RAI’s strategy of control buyouts of lower middle market companies. River Associates generally targets investments in platform companies with $3-10 million of operating cash flow (EBITDA) located in the U.S. or Canada. River Associates has invested in companies located in 20 different states and two Canadian provinces. The firm is opportunistic as to industries, having invested in a wide array of sectors including manufacturing, distribution, industrial service, business service and select specialty retail. In many instances, RAI employs a “buy & build” strategy in an effort to grow platform companies via strategic acquisition.
“We sincerely appreciate the support of our existing and new investors who see value in our time-tested track record and strategy”, said Mark Jones, Partner of RAI. “We are focused on continuing to differentiate ourselves with our longstanding tenure of supporting management teams of lower middle market companies. We have always believed that all of our investments are equally important since behind each investment are management co-investors and numerous employees who look to us as economic and strategic partners. The larger fund size will allow us to acquire platform companies at the top end of our $3-10 million EBITDA range as well as effect numerous add-on acquisitions.”
Founded in 1989, River Associates has completed 71 distinct investments, including platform and add-on opportunities. The firm has generated strong returns for its investors and portfolio company management teams, the latter of whom are often meaningful investors in their respective companies. The firm has focused on earnings growth over financial engineering to generate returns.
Speaking to the current investment pace of River VI, Partner Mike Brookshire relays that “we are pleased that we have already been able to invest almost $50 million of River VI capital prior to the final closing and we are excited to now solely focus on identifying new platforms as well as working to grow existing River VI portfolio companies. Our current platforms include such diverse companies as National Deli (deli meats), KK Precision (complex components for gas turbines), Omega Environmental Technologies (aftermarket automotive truck and off-road air conditioning parts) and Industrial Magnetics (permanent and electromagnets for work holding, lifting, fixturing, conveying and magnetic separation applications) and we hope to complete strategic add-ons for all of these businesses.”
Proskauer Rose LLP served as fund counsel for River VI. LB Group LLC acted as placement agent for certain limited partner interests.
About River Associates Investments, LLC
Founded in 1989, RAI has a 22+ year track record of initiating control buyouts of lower middle market companies in a variety of industries. The firm focuses on companies with operating cash flow (EBITDA) in the $3-10 million range where they can invest $10-30 million of equity. Over its history, RAI has invested in numerous family succession transactions, founder owned business sales, corporate divestitures and private equity portfolio company dispositions. In addition to Mark Jones and Mike Brookshire, RAI partners include Jim Baker, Patten Pettway and Craig Baker.