SK Capital Targets $400M For Fund

Firm: SK Capital Partners

Fund: SK Capital Partners III LP

Target: $400 million ($500 million hard cap)

Placement Agent: UBS

SK Capital Partners, best known for launching, then pulling a dividend recap that would have been a huge home run, is in the fundraising market, looking to raise as much as $500 million for its first fund structured as a conventional limited partnership, according to three sources.

The target for the fund is $400 million, and the hard cap is $500 million. The fund placement group of UBS is helping the New York-based firm.

Investors, who generally like to see a long track record of investments and exits, could view this as an ambitious effort. The firm, founded in 2007, has only three portfolio companies. Its most recent came in May when it recapitalized Calabrian Corp., a producer of sulfer dioxide used in municipal wastewater treatment, personal care, oil field work, food preservation and other applications, according to a press release.

The firm also appears to have no full exits, according to its Web site, Thomson One and Capital IQ. However, one source, an executive close to the firm, said that SK Capital “has multiples of its money out of funds one and two,” but declined to elaborate. Fund I and Fund II were special purpose vehicles devoted to making the firm’s first two deals, this source said.

SK Capital grabbed headlines last fall when it tried to launch a $922 million dividend recap for Ascend Performance Materials LLC, a St. Louis, Mo.-based company that makes nylon used in carpet fiber. The deal would have showered an amazing return on SK Capital, which invested a total of about $54 million in the company in 2009. The firm ultimately pulled the recap.

Still, sources say Ascend Performance is doing extremely well, allowing the firm to recoup its investment and then some through smaller dividends and bolstering its case for Fund III. In the release announcing the acquisition of Calabrian, the firm noted that its other two companies—Ascend and Aristech Acrylics LLC, a manufacturer of acrylic sheeting for baths, showers, signs and other applications—have combined revenues of approximately $3 billion.

SK Capital was started by Barry Siadat, a chemical engineering expert who formerly co-founded Arsenal Capital Partners, another New York-based buyout shop, and Jamshid Keynejad, who previously led numerous investments in various private enterprises, according to SK Capital’s Web site. The firm targets mid-market companies in the specialty materials and chemicals sector as well as in health care.