Arsenal Capital Partners Closes Fund III with $875M

Arsenal Capital Partners, a New York-based buyout shop focused on lower-middle-market specialty industrial and healthcare companies, has closed its third fund with $875 million in commitments. The firm said the fund, Arsenal Capital Fund III LP, exceeded a $750 million target. Arsenal Capital Partners II LP, was raised in 2006 with $500 million of committed capital.


Arsenal Capital Partners (“Arsenal”), a leading New York-headquartered private equity firm that invests in lower middle market specialty industrial and healthcare companies, announced today that it has successfully completed fundraising for Arsenal Capital Fund III LP (“Fund III”) with $875 million of committed capital, exceeding its target of $750 million. The firm’s previous fund, Arsenal Capital Partners II LP, was raised in 2006 with $500 million of committed capital. Arsenal now has over $1.6 billion of committed capital under management.

Commenting on the firm’s fundraising success during the current challenging fundraising environment, Terrence Mullen, Co-founder and Partner at Arsenal, said, “We are delighted to have surpassed our expectations for Fund III and achieved a 75% increase in committed capital from our last fund. We sincerely thank all our investors for their tremendous support. We are very gratified by the investors’ response, citing the institutional quality of our firm committed to the opportunities and needs of the lower middle market, our leading franchises in specialty industrials and healthcare, and track record of building high performance companies.”

“Fund III is a testament to the talented and experienced team that we have built and honed over 13 years and our strong culture of teamwork and collaborative value creation. Our uncommon balance of investment, industry and operating talent, working in unison enables us to be a partner of choice with management teams who are seeking to achieve differentiated strategic positioning with enhanced capabilities in growth, technology and operations. With offices in New York and Shanghai and a global team, our international experience and capabilities are a major differentiator in the marketplace. The Arsenal strategy and model continue to win in the market, as evidenced by the 57 investments we have completed since inception,” said Jeffrey Kovach, a Co-founder and Partner at Arsenal.

Bill Farrell, Head of Investor Relations for Arsenal, said, “Arsenal’s excellent performance and consistent track record of building high growth, high quality companies that strategic buyers desire impressed both existing Arsenal fund investors and attracted a terrific group of new investors in Fund III.” The Fund’s investor base is international in scope, with approximately half of the institutional investors from the U.S. and the balance from Europe and Asia. The investor base represents a diverse group of endowments and foundations, public and corporate pension plans, financial institutions and family offices, including PKA A/S, Northwestern Mutual Life Insurance, PPM America, Northeast Utilities Service Company Retirement Plan, KIRKBI A/S, Partners Capital, Unigestion, Storebrand, Purdue University, Funds advised by Bowmark Capital and Cheyenne Capital Fund.

Arsenal, with a team of 29 experienced professionals, has deep sector expertise and leading franchises within the specialty industrials and healthcare industries. The firm has an exclusive focus on lower middle market transactions between $50 million and $250 million of enterprise value. Arsenal focuses on companies with headquarters in the U.S. and significant operations and growth opportunities in both the U.S and internationally. 2012 was a very active and productive year for Arsenal, as the firm completed eight substantial new investments, successfully exited its investment in portfolio company Novolyte in a sale to BASF, and recapitalized Charter Brokerage.

Arsenal has already completed four platform investments and deployed approximately $195 million of equity capital in Fund III. Commenting on the firm’s future initiatives, Messrs. Mullen and Kovach noted that the firm’s investment principals continue to review a robust pipeline of extremely high quality transactions and will select those that best fit within the firm’s “growth and improvement strategy” and offer attractive investment prospects for our investors.

Arsenal was assisted by Forbes Private Capital Group as a placement agent and Kirkland & Ellis LLP served as legal counsel.

About Arsenal Capital Partners

Formed in 2000, Arsenal Capital Partners is a leading New York-headquartered 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. The firm 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.