New York private equity firm Arsenal Capital Partners has acquired Kel-Tech. No financial terms were disclosed. PPHB advised Kel-Tech on the transaction while Syntal Capital Partners advised the Keller family. KeyBanc Capital Markets and Madison Capital Funding provided senior debt financing and funds managed by Sankaty Advisors and Metropolitan Life Insurance Company provided subordinated debt financing for the deal. Headquartered in Midland, Texas, Kel-Tech is a provider of oilfield chemicals for the Permian basin.
NEW YORK, March 10, 2014 – Arsenal Capital Partners, a leading New York-based private equity firm that invests in middle-market specialty industrial and healthcare companies, announced today the acquisition of Kel-Tech, Inc., a leading specialty oilfield chemicals provider in the Permian basin.
Founded in 1983, and headquartered in Midland, Texas, Kel-Tech provides specialty chemicals and related services to production, field stimulation and drilling operations in the Oil & Gas market. The company also provides technical and lab services to support ongoing needs of customers.
“Kel-Tech is a leading supplier of solutions to the oil and gas sector, specifically in the growing Permian basin. We look forward to working with Frankie Keller and his team to support Kel-Tech’s existing customer base and growing the business geographically, through strategic add-on acquisitions,” said Tim Zappala, a Partner who co-heads Arsenal’s Specialty Industrials practice.
The investment in Kel-Tech follows Arsenal’s recent acquisition of Flowchem Ltd., a leading specialty chemical provider to the pipeline industry. Flowchem provides Drag Reducing Additives to improve pipeline flow in onshore and offshore pipeline applications, reducing drag and turbulence in petroleum pipelines and increasing throughput capacity and energy efficiency, providing significant cost savings to pipeline operators.
“We are excited to partner with Arsenal as we enter this new stage for our business. It was important for us to team up with a strong partner as the company continues to support the growing needs of our long-standing customer base in the Permian Basin. Their operational expertise and successful track record in the chemicals and materials sector will be a valuable asset as we continue to strengthen Kel-Tech,” said Frankie Keller, founder and CEO of Kel-Tech.
“The Kel-tech deal builds on Arsenal’s exposure to the oil and gas market after our recent acquisition of Flowchem. We see the Permian region as a leading source of growth in U.S. oil production and the company’s services will be crucial to support this trend,” said Shawn Abrams, an Operating Partner in Arsenal’s Specialty Industrials practice.
Arsenal’s other current investments in the specialty industrial and energy sectors include International Fiber Corporation, the leading supplier of cellulose‐based insolub fiber products for food and industrial applications globally; Dash Multi-Corp., a leading manufacturer of formulated polyurethane, vinyl plastisol, specialty coatings as well as recycled rubber products; IGM Resins, a leading provider of intermediates to the global ultraviolet (“UV”) radiation cure coatings, inks and adhesives industry; Chromaflo Technologies, the largest independent global pigment dispersion provider to the architectural and industrial coatings and thermoset composites industries; Inhance Technologies, a leading provider of unique plastic barrier, adhesion and surface enhancement products and services as well as a manufacturer of value-added materials; Royal Adhesives & Sealants, the largest global pure-play producer of proprietary, high-performance adhesives, sealants and coatings. Previous investments in the sector include Novolyte Technologies, Genovique Specialties, Velsicol Chemical, Sermatech International, and Vertellus Specialties.
PPHB acted as financial advisor and Todd, Barron, Thomason, Hudman & Baxter, P.C. acted as legal advisor to Kel-Tech. Syntal Capital Partners acted as financial advisor to the Keller family. Kirkland & Ellis LLP acted as legal advisor to Arsenal. KeyBanc Capital Markets and Madison Capital Funding LLC provided senior debt financing, and funds managed by Sankaty Advisors and Metropolitan Life Insurance Company provided subordinated debt financing for the transaction.
About Arsenal Capital Partner
Arsenal Capital Partners is a leading New York-based private equity firm that invests in middle-market specialty industrial and healthcare companies. Arsenal makes investments in sectors where the firm has significant prior knowledge and experience. Arsenal targets businesses that have the potential for further value creation by working closely with management to accelerate growth and leverage the firm’s operational improvement capabilities. Arsenal currently has $1.7 billion of committed equity capital. For additional information on Arsenal Capital Partners, please visit www.arsenalcapital.com.