Riverside Co., which says they are more Mahatma Gandhi than Wall Street’s fictional Gordon Gekko, says the deleveraging of the global economy is presenting a challenge for leverage buyout firms.
“Private equity is going through a shake-out,” says Stewart Kohl, co-chief executive at Riverside, who is based at the firm’s Cleveland, Ohio office.
Riverside, founded in 1988, currently manages US$3.4 billion through 20 offices in 14 countries.
“I feel in each of the markets there are good opportunities for the firm,” says Kohl.
As much as 60 per cent now of each of Riverside’s buyouts is debt, with the rest equity. The company makes takeovers of between US$15 and $200 million.
Riverside’s total gross internal rate of return over 23 years, including businesses sold along with existing portfolio companies, is 45 per cent, says the company.
“Australian investors have been late to the party,” says Kohl. “They are very sensitive on fees and expenses.”
In Australia, where Riverside opened a Melbourne office last year, it is examining takeovers among health-care, consumer goods and software companies.
Riverside last year paid $65 million for a majority stake in Australia’s Boost Investment Group, makers of “Boost Juice.”