Arsenal gunning for $400M

Arsenal Capital Partners has held a first close on its second fund, Arsenal Capital Partners II, with $270 million in commitments.

The New York City-based firm has a target of $400 million on the fund. It held the close in August and is anticipating a finalclose by year end, according to a person familiar with the matter. The fund so far is almost exclusively composed of returning investors from Arsenal’s first fund.

Arsenal raised $300 million for its first fund in June 2003. Limited partners from the first fund included Adams Street Partners, National City Equity Partners, LGT Capital Partners, Northeast Utilities Pension Fund, PPM America Capital Partners, Oklahoma Police Pension and Retirement System and Wilshire Private Markets.

The firm focuses on lower-middle market niche manufacturing and services companies. Its most recent exit came in August when it sold two-and-one-half year old investment Scientific Protein Laboratories to American Capital Strategies. Terms of the deal were not disclosed.

This summer, Arsenal combined two portfolio companies, Rutherford Chemical and Reilly Industries, to create Vertellus Specialties Inc. Other portfolio companies of the firm include Interdynamics, which supplies the automotive aftermarket; Leis Medical, a supplier to orthopedic implant OEMs; and Renaissance Mark, a maker of labels and brand images. —Mark Cecil