Arsenal gets LP approval for cross-fund investment in WIRB-Copernicus

  • Arsenal Capital Partners IV and MSD Capital LP recapitalize WCG
  • Firm initially invested in the company in 2012
  • WIRB-Copernicus Group has been making acquisitions

Arsenal Capital Partners for the first time used a newer buyout fund to back one of its existing portfolio companies in the recapitalization of WIRB-Copernicus Group, a provider of regulatory and ethical review services for clinical research.

The New York middle-market general partner won approval for the deal from limited-partner advisory boards from Arsenal Capital Partners II and Arsenal Capital Partners IV, a spokesman for the firm said. The firm declined to comment further.

The firm led an investment group, including Arsenal Capital Partners IV and MSD Capital LP, to recapitalize the company for additional growth, an Aug. 18 statement from the firm says. Terms of the deal weren’t disclosed.

Arsenal first invested in Western International Review Board and Copernicus in 2012 using an undisclosed amount of capital from Fund II, a $500 million pool that closed in 2006. The firm then combined the two companies.

In 2014, WIRB-Copernicus bought ePharmaSolutions, a technology specialist in conducting clinical trials. Terms weren’t disclosed. Other WIRB-Copernicus acquisitions include CenterWatch and karmadata, both announced in June, as well as Clintrax Global in March.

LPs aren’t always supportive of cross-fund investments, which is why most funds require some level of LP approval.

David Fann, chief executive of consultant TorreyCove Capital Partners, said such multi-fund investments remain somewhat rare in the buyout world.

“Rationale and motivation, valuation of the securities between the funds, possible timing of the exit are things that typically concern LPs and in some cases, give them heartburn,” Fann said.

Founded in 2000, Arsenal disclosed $906 million in commitments and a target of $1.25 billion for Arsenal Capital Partners IV, according to a Form D filing in February. The firm has not officially closed the fundraising for that pool.

It drew in $875 million for Fund III in 2013 and $500 million for Arsenal Capital Partners II in 2006.

Action Item: Arsenal Capital:

Photo courtesy ©iStock/pepifoto