Fundraising for the Portland, Ore.-based lower mid-market buyout shop has hit a veritable wall since the second half of 2008. The firm had raised $62 million by the end of first quarter of 2008, and firm executives expected to raise about $100 million by the end of the summer of 2008, as previously reported in Buyouts. But to date the shop has raised about $70 million in commitments for the fund, Riverlake Partners II LP. The initial target for the fund was $150 million, though sources said firm executives are comfortable operating below that level, and that the firm had yet to close a deal from the fund.
Our source declined to elaborate on prospects for the fund’s first deal, other than to say firm executives expect to close one within the next several months.
The firm also terminated its arrangement with E.L.K Capital Advisors, a Northbrook, Ill.-based placement agent it retained to help it raise the fund. An E.L.K. Capital executive did not return calls seeking comment.
The firm closed its debut fund at $34 million in 2004. Investors in the second fund include the Oregon Investment Fund.
Riverlake is the latest in a long line of firms that have suspended or significantly changed their fundraising goals amid perhaps the most difficult fundraising environment in in recent memory. In April, Jacobson Partners, a New York-based turnaround firm, dropped plans to raise JP Acquisition Fund V LP, as previously reported in Buyouts. The firm raised about $125 million for its predecessor fund. CapitalSouth, a Charlotte, N.C.-based lower mid-market firm began raising CapitalSouth Partners Fund III LP in May 2007, and planned to close on its target of $330 million in May 2008. The firm has so far raised $300 million and has extended its fundraising period, as previously reported in Buyouts.
Riverlake has made seven investments via its first fund, and one exit: a 4x return on Stock Equipment Company Inc., which it sold in June 2006 to Schenck Process of Germany after owning the company for less than three years. Revenues at the company increased by 57 percent, to $66.3 million, under the guidance of Chuck Grant, a Riverlake operating partner, according the firm’s Web site.
Riverlake seeks to invest $3 million to $8 million in companies with enterprise values between $5 million and $50 million and revenue greater than $10 million. Sectors of interest include industrial and consumer products manufacturing, and service businesses. The firm regularly invites its investors to co-invest alongside them in deals.
Read the rest of this story at the website for Buyouts Magazine, where Bernard Vaughan is a Senior Editor.