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Asia yes – China, India no

US mid-market firm Riverside is targeting $100 million for its first Asian fund, but will stay away from India and China.

The Riverside Company, a US-based global mid-market investor, is the latest in a series of international private equity firms increasing their activities in Asia. The firm is raising its first Asia-focused fund targeting $100 million and has had a first close on $25 million.

It has already made investments in Japan and South Korea. In Japan, it acquired Shinsouki, a parking lot operator, in January. In Korea, it bought Wiz Korea, a preschool education franchise, for an undisclosed sum.

Riverside differs from its peers in that it has made a plunge into Asia with a focus on investments in the region's mature economies but not in India and China. The firm has opened offices in Tokyo, Seoul and, most recently, Hong Kong. Other markets the firm is interested in investing in are Australia and Singapore.

“We determined that our business model works best in more mature markets, where businesses are struggling to expand their operations,” said Stu Baxter, a managing partner at the firm and the head of its Asian fund. He said Riverside was looking for business it could “reenergise”.

It invests at the smaller end of the mid-market, typically in privately owned family businesses and sometimes in divisions of public companies. Through the Asia fund, the firm will acquire companies with less than $10 million of EBITDA. “We're at the beginning of the food chain for many private equity buyers,” said Baxter.

One of the factors driving the firm's foray into Asia is that its North American and European portfolio companies are increasingly engaging in the region.

The new Hong Kong office is to provide services for all the firm's global funds. It has appointed Brian Bunker, who was formerly the president of the China operations at Danaher, a global company providing medical and industrial technologies and products, as a managing director. Bunker will help Riverside's 66 portfolio companies source, sell and operate throughout Asia.

Baxter said that the firm could be investing in India and China at a later stage and would probably have offices on the ground in those two countries as well.

2008 has been rather hectic for Riverside. It has completed 21 deals so far this year. It manages assets of more than $2 billion across nine funds from 18 offices worldwide.