Arsenal earns 3x on chemical exit

Arsenal Capital earned a three times return on its cumulative capital invested on the sale of Vertellus Specialities, a chemical company Arsenal formed just last year.

New York private equity firm Arsenal Capital has sold specialty chemicals maker Vertellus Specialties to Chicago-based Wind Point Partners. Neither firm disclosed terms of the transaction, but a source close to the deal said Arsenal earned a greater than three times return on its cumulative capital invested.

Vertellus serves the agriculture, nutrition, pharmaceutical, personal care and performance materials markets. Arsenal created Vertellus in 2006 through the merger of its portfolio companies Reilly Industries and Rutherford Chemicals. Arsenal acquired Reilly in October 2005 for $250 million (€170 million), and Rutherford in 2003 for $65 million.

Since then Arsenal made “significant capital investments” to expand the company’s production capacity and implement new technologies. Arsenal also made a particular effort to expand Vertellus’ production capacity in China to meet the country’s demand for vitamins and herbicides. Vertellus had sales of $450 million last year.

Wind Point made the acquisition in partnership with Richard Preziotti, who took over as chief executive upon the deal’s close, replacing Timothy Zappala. Preziotti was most recently vice president and general manager of Honeywell Chemical and Fluorine Products.

“I look forward to working with the management team and Wind Point to realize the potential of this business by maximizing productivity, increasing sales of pyridine and picoline derivative products, and driving further company growth in natural polyols and niche specialty markets,” Preziotti said in a statement.

National City arranged first lien debt financing for the deal, and Silver Point Capital arranged second lien debt financing.