Bow River Capital has closed its biggest fund yet.
The 14-year-old Denver private equity firm on July 14 closed a $262 million fund. It plans to invest that money over the next five years.
“We’re often the first source of institutional capital,” managing partner Blair Richardson said.
That’s because Bow River, which launched its first pure buyout fund in 2011 and is today a 15-person firm, is targeting businesses that other private equity firms tend to overlook. While colleagues are looking to buy companies based on the coasts, Bow River focuses on the central U.S.
And in contrast to the asset-heavy companies deemed safer bets by other buyout fund managers, Bow River is looking for companies with relatively few assets, so that cash flows won’t get eaten up by inventory and equipment.
Richardson and partner Eric Wolf launched Bow River in 2003. Besides its buyout funds, the firm also has a real estate investment fund and an energy fund. It has $500 million in assets under management.
On the buyout side, Bow River has invested in Denver-area companies including a home nursing and therapy firm started in 1979 and an engineering firm started in the mid-1990s.
The life of the 2017 fund is 10 years. It attracted 235 investors before closing, Richardson said. The fund is especially seeking infrastructure, engineering, healthcare, and business services companies. Bow River will invest in 30 companies: 12 to 15 main investments and another 12 to 15 add-on investments it will acquire to complement them.
To retain employees, Bow River buys a 60 to 80 percent stake in the companies and also encourages leaders that don’t own the company to buy in.