Riverlake’s Raising

Scratch any pitch these days and you’ll find a team that’s touting its ability to manage through a recession. You will hear that they were once, or still are, card carrying members of the Fearlessly Hand Dirtying Sleeve Roll Uppers of America. All the same, that much coveted quality of legitimate operational experience seems today as much talked about as it is in short supply.

One firm on the road fundraising now and with a real claim to such experience is Riverlake Equity Partners. Its managing partner, Erik Krieger, who founded the firm in 2003, was CEO of Cleanpak International until 2005 and also was cofounder of tech-focussed I-bank Pacific Crest Securities. The other two partners also come with corporate experience: Victor Petroff was President of the Precision Interconnect Division of Tyco International, Ltd. and Chuck Grant  was CEO of SP Industries.

Even so, while operating experience is fine, track records are devine. This is where the fund is a slightly harder sell: Riverlake has only one exit to date, a June 2006 exit of Stock Equipment, a maker of bulk material handling equipment and environmental controls for the power generation and other process industries. A source said the deal generated a 4x-plus return, but still, one is the loneliest number an LP will ever do. To compensate, the firm’s been touting improvements in its portfolio of half a dozen other companies.

With $62 million raised so far for the second fund, some apparently are convinced. The new fund, Riverlake Equity Partners Fund II, has a $150 million target and a $175 million hard cap. The PPM went out in the fourth quarter and the firm hopes for a second and perhaps final close in the second quarter. A good number of the LPs come from the firm’s executive network; another $5 million comes from the partners themselves; $10 million more comes from its advisory board. E.L.K. Capital Advisors is placement agent. With the fund raised, the firm will go after eight to ten firms, putting in $6 to $10 million of equity off the bat, much of it in companies in the Pacific Northwest, near their Portland, Ore. headquarters.

If you want to meet with the partners, dust off the clubs. The firm’s three founders are determined to buck the New York Times-noted trend of golf’s demise. All three note on their website they are devotees of walk spoiling.