Los Angeles-based private equity investor Riordan, Lewis & Haden has tapped Orange County for its first investment with a new $265 million fund it closed late last month.
Riordan, Lewis & Haden is making a significant investment in Irvine-based employment agency CyberCoders Inc. Details of the deal weren’t disclosed.
“We like their unique model and culture,” said Murray Rudin, a partner in Riordan, Lewis & Haden’s Irvine office.
CyberCoders recruits and places people in mid- to executive-level jobs. Average salaries of people it places run $50,000 to $150,000 a year.
The company was founded in 1999 as a recruiting agency for software engineers. It later expanded to recruit in other big industries. Major clients include Wells Fargo & Co., Microsoft Corp., and Beazer Homes USA Inc.
CyberCoders fits Riordan, Lewis & Haden’s ideal model: a Southern California-based company that is profitable and on the rise.
“We give them help while they’re in the growth mode,” Rudin said.
Riordan, Lewis & Haden’s newest fund, RLH Investors II, is more than double the size of its initial fund. Its investors include pension funds, insurance companies, banks and foundations.
The second fund plans to make two more buys by the end of the year, according to Rudin.
“There are about 12 we’re looking at right now,” he said. “It’s hard to predict when things will result in a purchase.”
RLH Investors II plans to invest in a total of 12 to 18 companies with revenue of $20 million to $250 million.
Riordan, Lewis & Haden was started 25 years ago with backing from former Los Angeles Mayor Richard Riordan. It invests in companies from the two funds.
The private equity firm’s initial fund, about $120 million, is fully invested. The group has sold five of its companies and held onto another five.
Pat Haden, another partner in the firm, is a former University of Southern California and Los Angeles Rams quarterback. Haden joined in 1987.
Also a partner, Chris Lewis has been with Riordan, Lewis & Haden for more than 20 years. He also serves on the boards of two public and four privately held companies.
About 85% of its holdings are Southern California companies. They typically have revenue of $20 million to $250 million.
“We have connections in California, and prefer working with management on a face-to-face basis,” Rudin said.
Riordan, Lewis & Haden typically holds investments for about four to six years, with returns of 20% or more, according to Rudin.
The private equity firm sticks with what it knows best. During the dot-com boom, Riordan, Lewis & Haden decided it was best to stay away from tech companies or others that didn’t have a proven profitable model.
“We’ve had success in services and outsourcing in the last two decades,” Rudin said. “We don’t do anything with proprietary technology.”
Riordan, Lewis & Haden also advises on strategic issues such as creating value and management buyouts.
CyberCoders isn’t the first OC company Riordan, Lewis & Haden has invested in. Others include Irvine-based Cymetrix, which offers services to help hospitals run more efficiently and Systems Management Specialists in Brea, which helps manage computer technology for companies.
