Riverside Raising Asia Fund for Chinese Buyouts

(Reuters) – The Riverside Company, one of the oldest U.S. buyout firms with more than $3 billion in assets under management, is raising its first Asia fund to focus on buyout deals in Greater China, a senior executive said.

Stewart Kohl, co-chief executive of Riverside, which is named after the Hudson River in New York, told Reuters that the firm’s first Asia fund would also focus on other Asia-Pacific countries including South Korea, Japan and Australia.

Kohl declined to comment on the size of the fundraising plan because of company policy, but a source familiar with the situation told Reuters that Riverside aimed to raise about $100 million for its first Asia fund and that the firm had already raised around $30 million.

In the United States, Riverside typically targets companies with an enterprise value under $200 million, but deal size in Asia, a relatively new market for Riverside, could be smaller, said Kohl.

“About four years ago, we started to study the Asia market, which could be the biggest region for our investments someday, although it would take very long time,” Kohl told Reuters on the sidelines of the SuperReturn Asia Conference in Hong Kong.

“We’re definitely not the quickest (private equity) people in the world, but we want to make sure our investments in Asia can be successful,” he said. “Getting rich slowly is our strategy.”

The mid-market investment specialist has already made two deals in Japan and one in South Korea.

Riverside invested in Shinsouki, a leading operator of parking lots in Niigata City, Japan, in 2008 and early this year helped Shinsouki merge with a local rival to obtain a bigger car-parking market share in the world’s second-largest economy.

In South Korea, it backed Wiz Korea, an educational services provider, which Kohl said aimed to expand out of the Korean market with help from Riverside.

Late last year, Riverside, which Kohl said had made 31 deals worldwide after reviewing about 4,000 investment proposals in 2008, opened its Hong Kong office. It hired Brian Bunker, former China head of manufacturing company Danaher Corp, as its Asia managing director to seek deal opportunities in China.

In China, the typical deal size for Riverside would be between $10 million and $30 million, said Kohl, adding that it would not necesssarily be a 100 percent buyout. Riverside was keen to take a controlling stake like 60 percent or 70 percent in a local company, he said.

Kohl said he expected to help portfolio companies at least triple their business after investment and aimed to help Chinese companies acquire U.S. assets for business expansion outside China market.

By George Chen