To raise its most recent fund, private equity firm Arsenal Capital Partners embarked across new territory.
The New York-based firm utilized its Shanghai office for the first time to help raise capital for its latest fund, which closed at $875 million. Previously, limited partners (LPs) were only in the U.S. and Europe, according to spokesman William Farrell.
"Asia is new for us," he says. "It basically reflects the maturation of the vehicle."
The fund, called Arsenal Capital Fund III, exceeded its target of $750 million. The firm has completed four investments and deployed about $195 million in equity capital under the fund. Arsenal's previous fund, which was raised in 2006, has about $500 million of committed capital. Arsenal, in total, has more than $1.6 billion in capital under management.
Arsenal focuses exclusively on deals between $50 million and $250 million in enterprise value. The firm focuses on specialty industrial and health care companies.
In January, Arsenal bought Research Dataware LLC, a software developer. In December, it bought Adhesives Packaging Specialties Inc. to add to Royal Adhesives and Sealants LLC. The deal was Royal Adhesives' 10th add-on acquisition since chief executive Ted Clark bought the company in 2003. Forbes Private Capital Group acted as Arsenal's placement agent while Kirkland & Ellis LLP advised on legal matters.
"We were oversubscribed - we could have raised in excess of that but we stopped at $875 million to maintain our discipline in the middle market. There's only a certain amount of capital that you can put to work in the kinds of deals we do - a hard cap is determined not by general partners' wishful thinking but also in discussions with what LPs think you should do," Farrell says.
Arsenal has already completed four platform investments and deployed about $195 million of equity capital in Fund III.
"We've done three specialty industrial deals and one health care deal," he adds.