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Riverside buys four companies for new fund

The Cleveland, Ohio-based firm’s microcap fund, which is targeting companies with EBITDA of less than $3m, has made four acquisitions in less than a month.

The Riverside Company has completed the fourth acquisition for its new micro-cap fund in less than a month, bringing the total number of companies acquired since the beginning of the year to seven.

The new fund centres on a micro-cap strategy being managed by Riverside partner Loren Schlalet, and will target companies with less than $3 million (€2.4 million) EBITDA.

Today the firm, which normally invests in middle market opportunities, announced two acquisitions made through the new fund. The first is Florida-based American Safety & Health Institute, which provides accreditation and training materials to safety and health certification centres around the world.

The second is ActivStyle, a Midwest distributor of incontinence products to government case workers and group home managers. Financial details were not released for either acquisition, but both were under the $3 million cutoff for the fund, which has not yet closed.

On 16 June the fund acquired LocalTel Yellow Pages, the largest independent yellow pages publisher in New England. On 13 June, the company acquired Express Courier International, a delivery company specialising in time-critical shipments serving the Southeast United States.

Schlalet said the firm has decided to pursue these small companies with a new fund because it found it was passing up too many good opportunities with its larger funds.

“The Riverside Capital Appreciation Fund is a $750 million fund,” he said. “Often times companies with just one or two million of EBITDA [would become available], which were very attractive acquisition targets but too small given size of our fund. What we opted to do was develop a new fund, and a new strategy to acquire these sorts of companies.”

Schlalet said that the fund will not focus on any particular sector but rather it will look at all types of companies with attractive growth potential. He said although there has been a flurry of activity related to the fund lately, it will be targeting seven to ten acquisitions per year.