New York private equity firm Arsenal Capital Partners has purchased Kel-Tech Inc., adding to flurry of M&A activity surrounding the oil and gas industry.
Kel-Tech, headquartered in Midland, Texas, provides specialty chemicals and related services to oil and gas producers and drillers. The company also provides technical and lab services.
This isn't Arsenal's first move into the oil and gas services sector in December, the firm bought Flowchem Ltd., another specialty chemical provider that supplies products to the oil pipeline industry. Arsenal has about $1.7 billion in committed equity capital. Other recent investments from the firm include the December purchase of Certara, a software company, and July deal for Adco Global Inc., an adhesives group.
PPHB acted as financial adviser to Kel-Tech, while Todd Barron Thomason Hudman & Baxter PC provided legal counsel. Kirkland & Ellis LLP was Arsenal's legal adviser. KeyBanc Capital Markets and Madison Capital Funding LLC provided senior debt financing, while funds managed by Sankaty Advisors and Metropolitan Life Insurance Co. provided subordinated debt financing for the deal.
Investors have been focused on the oil and gas sector, and surrounding sectors, for some time now. Recent transactions include Southcross Energy Partners LP's (NYSE: SXE) acquisition of natural gas pipelines in Texas for $40 million, and Mid Con Energy Partners LP's (Nasdaq: MCEP) deal for oil properties in Oklahoma and Texas for $41 million.
Private equity firms have been showing a lot of interest in the energy sector. Several firms have closed funds dedicated to energy investments, including Kohlberg Kravis Roberts & Co. (NYSE: KKR), which closed a $2 billion fund in March, and Intervale Capital, which closed a $495 million fund in February.
For more, see "3Qs With Craig Jarchow, Pine Brook Partners."