The Riverside Company, a US-based global mid-market investor, is raising its first Asia-focused fund targeting $100 million (€69 million) and has had a first close on $25 million.
The Riverside Asia Fund I comes at a time when the firm is looking to expand its footprint across Asia. It has made two investments in the region so far, the most recent of which was the acquisition of Wiz Korea, a preschool education franchise in South Korea, for an undisclosed sum.
Its first acquisition was that of Japanese parking lot operator Shinsouki in January this year. Though the firm has made two investments directly from its Asian fund, it has invested earlier in Thailand, China and Japan though its North American portfolio companies, said Stu Baxter, managing partner at the firm and head of its Asian fund and investment activity.
Riverside’s North American and European businesses are increasingly engaging in Asia, “so we decided to expand in Asia with our fund and offices”, Baxter told PEO.
Riverside Asia Fund I’s activities are overseen from offices in Seoul and Tokyo. The firm has another office in Hong Kong, which it established in April 2008 to provide administrative services to all its funds.
Baxter said that the firm intends to open at least an office or two each year in Asia in the coming years. Sydney and Singapore are most likely locations for new offices, he said, and those could to be followed by an office in Mumbai and in mainland China at a later stage.
At a time when most international private equity firms are looking to open offices in China and India, Riverside opted for Korea and Japan because “we determined that our business model works best in more mature markets, where businesses are struggling to expand their operations” or where owners are nearing retirement. Baxter said Riverside looks for opportunities where it can “reenergise the business” they choose to invest in.
In India and China, on the other hand, he said, many young entrepreneurs are not willing to give up control and most investments are made for minority stakes, while Riverside typically likes to assume control positions. As a result, the firm’s initial focus in Asia will be on the more mature economies of Japan, Korea, Australia and Singapore.
He added that the firm has a healthy pipeline of deals in the region, with a number of potential portfolio companies that are in various stages of due diligence.
Riverside manages more than $2 billion across nine funds, and has 17 offices worldwide. 2008 has been a busy year for the firm as it has completed 21 deals to date this year.