Chattanooga fund secures $222 million

Chattanooga fund secures $222 million

May 17th, 2012 by Dave Flessner in Business Around the Region

Fund at a glance

Name: River Associates Investments LLC

Location: Chattanooga

Business: Private equity fund started in 1989

Equity investments: The fund manages $330 million in committed capital and has made investments in 71 businesses through its history

Partners: Jim Baker, Patten Pettway, Mike Brookshire, Mark Jones, Blake Lewis, Craig Baker, G.H. Pettway

Chattanooga's biggest private equity fund announced Wednesday it has raised $222 million for its latest venture, twice as much as its previous fund launched six years ago and $22 million more than its initial goal.

River Associates Investments LLC attracted money from pension funds, insurance companies and endowments for the first time with its newest fund, its sixth in its 23-year history.

"I think our record of investing in the lower middle market of companies has proven successful and convinced existing investors to stay with us and new investors to join the fund," said Mark Jones, a former SouthTrust Bank executive who has helped manage River Associates business portfolio for the past 17 years.

Former Standard-Coosa-Thatcher Chairman George Pettway started River Associates in 1989. Jones said the equity fund "has stuck to our knitting" by investing in companies with cash flows between $3 million and $10 million a year.

Mike Brookshire, another partner in River Associates, said the newest fund organized two years ago has already invested nearly $50 million to acquire most or all of five companies: National Deli (deli meats), KK Precision (gas turbine components), Omega Environmental Technologies (automotive parts) and Industrial Magnetics (magnetic separation applications).

"We are excited to now solely focus on identifying new platforms as well as working to grow existing portfolio companies," Brookshire said in an announcement Wednesday.

River Associates typically keeps the management team in place at the businesses it acquires and works with its companies through its board to grow the business and make other related acquisitions.

The Chattanooga-based fund has invested in 71 companies in 20 states since it began in 1989.