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Huntsman Gay Inches Toward Fund II With Latest Deal

Target: Citadel Plastics

Price: Undisclosed

Sponsor: Huntsman Gay Global Capital LLC

Seller: Wind Point Partners

Financial Adviser: Seller: Alvarez & Marsal, KeyBanc Capital Markets Inc.

Legal Adviser: Seller: Reed Smith LLP

Its latest acquisition has made it much more likely that Huntsman Gay Global Capital LLC will revisit the fundraising market later this year, considering how much of its debut fund has been invested.

The Palo Alto, Calif.-based buyout shop announced recently that it has bought plastics composite company Citadel Plastics Holdings Inc. from Wind Point Partners. Terms weren’t disclosed, though the West Chicago, Ill.-based company generates about $300 million in revenues and Huntsman Gay typically invests $25 million to $100 million of equity per deal.

David Topham, a principal at Huntsman Gay, said the deal means the firm’s $1.1 billion debut fund, closed in 2009, is about 75 percent invested. It is “certainly the right time to start thinking” about raising a new fund, he said, but the firm is not actively fundraising. He declined to discuss fundraising further.

KeyBanc Capital Markets has been shopping the company for Chicago-based Wind Point since at least October, when Buyouts first reported on the process.

Wind Point launched the company with Mike Fitzpatrick, a former president and COO of Rohm & Haas, a specialty materials company where he worked for 30 years. Fitzpatrick is now retiring, said Paul Peterson, a principal of Wind Point, though Fitzpatrick will continue to advise Wind Point on its deals.

Citadel Plastics grew aggressively under Wind Point since launching in 2007. The company completed six acquisitions and entered the high-growth markets of Brazil and China, Peterson told Buyouts. In total, the company has 12 manufacturing locations managed through subsidiaries in the United States, Europe, Asia and Latin America.

The company also diversified its product offering by acquiring a thermoset business, which makes plastics for products like circuit breakers that can withstand high temperatures; previously, Citadel Plastics’s main business was in thermoplastic applications, or heavy plastics you might see in products such as tool boxes. Today the company’s products are used in the power tool, lawn and garden, automotive and other markets.

Huntsman Gay liked the company because of its highly technical expertise, which means its competition is limited. “It’s about technological ability, materials knowledge and service levels, rather than a high-volume” plastic product like water bottles, Topham said.

Still, the company’s expansion begs the question just what’s left for Huntsman Gay to do with it. Topham said the firm will support organic growth opportunities in Citadel Plastics’s two main businesses while looking to expand its international footprint even further.

Wind Point made the investment out of its $715 million sixth fund, closed in 2006. The firm is currently investing from its $950 million seventh fund, which is now about one-third invested, Peterson said.