Neuberger Berman has led a GP-led process centred on a portfolio of mid-market healthcare and technology assets.
Limited partners in 2012-vintage Riverside Fund V were given the option to roll into a continuation vehicle or sell their stakes to Neuberger and syndicate partner RCP Advisors, according to a statement seen by Secondaries Investor.
Nearly half of limited partners opted to roll into the new vehicle, which was $532 million in size and took six months to close, the statement noted.
Lazard advised on the process.
“We are excited to complete the continuation fund for Riverside Fund V, which will provide us with additional capital and time to continue the growth opportunities for the portfolio as we seek to generate additional returns for our investors,” said David Belluck, a general partner of the Boston-based manager Riverside Partners.
“Riverside has an attractive track record of success in the lower middle market and we are pleased to be able to partner with them,” added Ben Perl, managing director at Neuberger Berman.
Some of the seven companies in Fund V have been involved in significant M&A transactions in recent years, including labelling and artwork business Loftware and Calero Software. The GP-led process will provide more time for these combinations to bear fruit as well as capital for additional acquisitions.
Rolling LPs were given the option to reinvest on Fund V terms or on the terms agreed by Neuberger, with a majority opting for the former, according to sources close to the deal. The large number of LPs that rolled made it unnecessary for the deal to be backed by a syndicate of secondaries buyers, which is understood to have been at the ready.
Riverside Partners rolled 100 percent of unrealised carry into the continuation vehicle and put in an extra $4.25 million of GP commitment to increase alignment. The deal priced at par to net asset value based on an undisclosed reference date.
Neuberger Berman is a first-time investor with Riverside, Secondaries Investor understands. Riverside has $1.6 billion under management and is investing its sixth fund.
Fund V closed on $561 million in 2012 with support from LPs such as Arkansas Teacher Retirement System, Illinois State Board of Investment and Oklahoma Teachers’ Retirement System, according to PEI data.
Heightened interest in “covid-proof” sectors such as healthcare and technology drove secondaries boosted secondaries market pricing in the second half of last year, according to data from investment bank Greenhill. Pricing for buyout funds averaged 89 percent of NAV at the end of 2020, compared with 85 percent six months earlier.