Arsenal Capital Partners has agreed to sell its portfolio company Flowchem to specialty chemical company KMG for $495 million. Flowchem’s adjusted EBITDA was approximately $43 million over the past twelve months resulting in a 11.5x purchase price multiple.
Flowchem, acquired by Arsenal in December 2013, is a provider of drag-reducing agents, related support services, and equipment to midstream crude oil and refined fuel pipeline operators. The company was founded in 2001 and is based northwest of Houston in Waller, TX (www.flowchem-dra.com).
Drag-reducing agents, also known as DRAs, are specialty chemicals injected into midstream pipelines to reduce friction near the pipeline walls and within the turbulent fluid flowing through the pipeline network. By lessening fluid turbulence in pipelines, DRAs optimize pipeline flow and lower pipeline operating costs by increasing throughput capacity and reducing operating pressure.
Flowchem’s products include DRAs for light, medium or heavy crude oil, as well as DRAs engineered for refined fuel products. As the second largest DRA provider globally, Flowchem serves more than 50 pipeline operators worldwide, as well as midstream service providers and distributors.
“Flowchem has demonstrated impressive organic growth as it continues to provide unique solutions to the global oil pipeline industry. The company is strongly positioned for continued growth and the KMG platform will enable Flowchem to further support its customers and the market’s needs,” said John Televantos, Arsenal Partner and Co-Head of Arsenal’s Specialty Industrials Group.
Arsenal Capital Partners invests in middle-market specialty industrial and healthcare companies that have $100 million to $500 million in enterprise value. Industries of specific interest include specialty industrials and healthcare companies. Arsenal has $1.7 billion of committed capital under management. The firm was founded in 2000 and has offices in New York and Shanghai (www.arsenalcapital.com).
KMG is a global producer and distributor of specialty chemicals through three business segments: electronic chemicals, wood treating chemicals, and industrial lubricants. The company has annual revenues of approximately $300 million and is headquartered in Fort Worth, TX (www.kmgchemicals.com).
Capital for this acquisition, which is expected to close by mid-June 2017, is being provided to KMG by KeyBank, HSBC Bank USA, and HSBC Securities.
© 2017 Private Equity Professional | April 25, 2017
