Arsenal Capital Partners exited out of its IDQ Holdings, platform, a packager of specialty chemicals for the automotive aftermarket. The $170 million sale to Castle Harlan provides Arsenal with a return of more than 8x invested capital and a 30% IRR on the investment, a return that was eight years in the making.

The company, based in Garland, Texas, sells products to stores including AutoZone, Advanced Auto Parts and Wal-Mart, among others, providing air conditioning and other do-it-yourself solutions through these retailers.

Arsenal’s Terry Mullen and John Televantos worked on the deal and led IDQ’s development since its acquisition in 2002.

“We bought into the No. 1 player in an attractive market," Mullen said.

Then, IDQ acquired in 2007 its largest competitor in the form of EF Products. With merged operations, the at-home automotive air conditioner maintenance repair businesses proved an attractive asset to Castle Harlan.

Arsenal’s prior 2010 sale, also in the chemical space, provided the private equity firm a 12.5x return on its Genovique Specialties Corp., when it was sold in March to Eastman Chemical Co.

Earlier this year, in its only deal where the PE firm was the buyer thus far in 2010, Arsenal invested in FrontStream Payments Inc., a provider of payment solutions, which in turn bought Fast Transact, a competitor.

Other deals in the space have included Superior Capital’s Q’SO Inc. buy and subsequent launch of Edge Adhesives Holdings and GenNx360 Capital Partners’ Clariant Corp. specialty silicones business, as well as Bain Capital’s Styron Corp. buy from Dow Chemical.