Arsenal closes $1.3bn fourth fund

Arsenal Capital Partners raised the fund in a little over a year as a successor to its Fund III, which is currently booking a strong internal rate of return.

New York-based mid-market investor Arsenal Capital Partners has closed its fourth fund on its $1.3 billion hard-cap.

A source with knowledge of the fundraising told Private Healthcare Investor that the firm, which invests in specialty industrial and healthcare companies, has been on the road since last autumn raising Arsenal Capital Fund IV, the successor to its third fund, which it closed in 2012 on $875 million.

That source said Fund III has produced a 28 percent gross internal rate of return and a more than 20 percent net IRR as of 30 June this year.

The firm said that over 85 percent of its existing investor base re-upped for Fund IV, including US funds The Regents of the University of California, Northwestern Mutual, PPM America; Danish pension funds SAMpension and PKA AIP; and Swiss investors Pictet Alternative Advisors and Unigestion. New investors include LP giant CalSTRS and Denmark’s PensionDanmark. The firm said 60 percent of its institutional investors are US-based, with the balance from Europe and Asia.

“We are thankful for the wonderful long-standing commitment of our existing investors and for the trust new investors placed in our team and investment strategy,” Terrence Mullen, co-founder and partner at Arsenal. “We are very gratified by the investors’ strong vote of confidence in the institutional quality of our firm, our leading franchises in specialty industrials and healthcare, and our track record of building high growth, high value-added companies.”

From a 14-strong portfolio, the firm currently holds five healthcare companies including BioIVT, a provider of biological and in vitro products which it acquired from Missouri private equity firm Thomson Street Capital Partners in January this year. Other healthcare investments include TractManager, a provider of compliance management solutions for hospitals, WCG, a clinical services organisation, and Certara, a drug development and data analytics technology services company.

Across its four funds Arsenal has now raised just shy of $3 billion since 2000.