SK Capital eyes $500m for Fund II

The firm spun out of Arsenal Capital in 2007 when co-founder Barry Siadat left to start an independent firm targeting specialty materials, chemicals and healthcare investments. SK Capital made its first investment from the second fund, acquiring Solutia’s nylon business for $50m.

SK Capital Partners, which spun out of Arsenal Capital in 2007, will begin raising its second fund targeting $400 million with a hard cap of $500 million later this year.

The fund has already raised about $100 million in private capital but will approach institutional investors this fall, a source with knowledge of the situation told PEO.

SK has already invested from the fledgling fund, acquiring the nylon business of specialty chemical company Solutia for $50 million earlier this week. SK has been in discussions with Solutia on the transaction since last summer. Solutia, which came out of bankruptcy last year, decided to sell one of its major business lines and become a smaller company.

“This could be a platform, [the nylon business] had revenues of $1.9 billion in 2007, and $1.8 billion in 2008, it’s a substantial business,” said Barry Siadat, co-founder and managing partner of SK Capital. Jamshid Keynejad also is a managing director of the firm.

SK’s first fund consisted of money from the firm’s principals raised last year for the acquisition of Aristech Acrylics, which makes acrylic sheets and solid surface products for applications including hot tubs and showers. SK acquired Aristech from Mitsubishi for an undisclosed amount.

SK targets the specialty materials, chemicals and healthcare sectors and focuses on companies in the lower mid-market. It has been able to raise debt for its deals using asset-backed loans from lenders with whom it has good relationships, Siadat said.

“The kind of deals we’re doing, you can structure debt creatively,” Siadat said. “Our sectors, specialty materials, are very asset-intensive businesses and there are plenty of assets.”

Siadat co-founded Arsenal Capital in 2000, and left in 2007 when the US mid-market firm began to diversify its investment strategy.