RCP generally works with buyout fund managers with funds of between $200 million and $1 billion in committed capital. These fund managers then seek to invest in lower middle sized companies - typically, with $10 million to $250 million in enterprise value.
Following thorough due diligence, RCP seeks to commit capital to approximately 12 to 15 high quality underlying funds. These funds in turn invest in the acquisition of existing businesses located principally in North America. RCP aims to diversify underlying investments across industry focus, fund size, geography, strategy, and manager experience.
RCP’s primary funds-of-funds account for the majority of its capital under management. Funds-of-funds are limited partnerships which invest in a diversified portfolio of private equity funds at the time those underlying funds are established (i.e. in the “primary” market for such funds). Funds-of-funds are designed to bring access, careful selection, and diversification to investors which may otherwise find it difficult to assemble such a portfolio on their own. RCP is a specialized manager, which focuses solely on smaller managers in the North American lower middle market buyout sector. In this capacity, RCP’s skills are even more differentiated because this niche is very large, relatively unknown, and relationship-oriented. Also, specialized underwriting skills and experience are required to select the very best managers in this sector.
RCP devotes considerable resources (both human resources and information systems) to three areas that are critical for success: sourcing, selection, and portfolio management.