Valence Group, a newly formed merchant bank focussed on specialty chemicals and materials, has completed its first private equity deal with the purchase of Aristech Acrylics, which makes acrylic sheets and solid surface products for applications including hot tubs and showers. Via its private equity affiliate SK Capital, the firm purchased Aristech from Mitsubishi for an undisclosed amount.
SK Capital was formed in September 2007 a few months after Arsenal Capital co-founder Barry Siadat left the US mid-market firm. Siadat told PEO that as Arsenal diversified its investment strategy with deployment of its second fund, he felt he should “stay pure to where my focus and expertise are”, which is specialty chemicals and related industries.
Siadat founded SK Capital with Jamshid Keynejad, formerly president of Signet Diagnostic, a Florida-based chain of radiology imaging centers and outpatient services Keynejad aquired, grew and eventually sold to Investcorp, according to a spokesman.
“In December we added significant investment banking capability headed by Telly Zachariades, who was a senior managing director at Bear Stearns,” Siadat said.
Though SK Capital has “a few deals under letters of intent”, Siadat said it will use the Valence name going forward.
In addition to M&A advisory services, the firm will sponsor controlling private equity investments in the lower mid-market. Its sweet spot will be companies with total enterprise value of $150 million, though Siadat said the firm will do deals ranging from $50 million to possibly $200 million, translating into equity cheques that range from roughly $20 million to $40 million.
“We’re focusing on niche players, looking for businesses that have strong positions but perhaps have been neglected to some extent,” he said. Valence will target “the non-core assets of major corporations and perhaps some private companies going through generational changes”.
Like Arsenal, Valence will work to improve businesses’ operations by bringing in strategic and operational resources, and will make investments to grow companies both organically and via add-on acquisitions, Siadat said.
“We think this is a space that today hasn’t been totally satisfied,” he said, adding that Valence’s advisory business has gotten several buy-side and sell-side assignments.
The firm has a six-person team in New York and 10 investment professionals globally.
“We’re trying to get our London office organised and we’re in the process of setting up our Shanghai office shortly because this is really a global business, specialty chemicals,” Siadat said.
Valence has yet to begin a formal fundraising process and is currently investing private capital.