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Riverside positions for market disruption with value investing strategy

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Riverside positions for market disruption with value investing strategy

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Sean Ozbolt, Managing Partner, The Riverside Co.

Source: The Riverside Co.

In the face of an anticipated market correction, lower mid market-focused Riverside Partners LLC, doing business as The Riverside Co., has set up a new value investment strategy targeting complex situations.

Managing Partner Sean Ozbolt, who joined the firm from Aurora Capital Group where he was a partner, will spearhead the new North America-focused private equity strategy, which will target corporate divestitures, traditional buyouts, operational restructurings and balance sheet restructurings. It will sit alongside its broader private equity strategy, as well as its structured capital and private credit solutions.

The team members will look for complex situations or inefficient processes where they can identify some value that may not be readily apparent, Ozbolt said in an interview.

Riverside has been considering the strategy for a couple of years, Ozbolt said. He expects the strategy will be effective across market conditions, but if there is a downturn, "I would imagine we would be busier."

Following a correction, companies that are not operating as efficiently as possible tend to be more impacted even if they are in stable industries, Ozbolt said, and value could be found. A squeeze on debt providers could also provide investment opportunities.

"There's a view that we've been in a very long bull market and there's some headwinds on the horizon from an economic standpoint. ... From a timing standpoint, we're excited to build the strategy now and be prepared if there is a downturn in the economy or credit market dislocation," he said.

Riverside's co-CEO, Béla Szigethy, said in a statement that Ozbolt's addition positions the firm "to be a proactive investor during any period of economic weakness when companies become financially or operationally challenged."

The strategy's sweet spot will be those companies with $75 million in sales up to $350 million in sales. From a sector perspective, it will have a "pretty broad mandate," Ozbolt said. It will avoid any cyclical industries, overly capital intensive businesses and commodity-type businesses.

Ozbolt started his private equity career in 1999 working on traditional buyouts before focusing on value investing after joining H.I.G. Capital LLC in 2005.