Equity Firm Flips Vertellus


Private equity firm Arsenal Capital Partners recently sold specialty chemicals manufacturer Vertellus Specialties Inc. to Wind Point Partners, another private equity firm. Terms of the transaction were not disclosed. Vertellus manufactures castor oil derivatives and systems, and citrate polymer additives and systems.

In 2006, New York-based Arsenal formed Vertellus, headquartered in Indianapolis, through the merger of its portfolio companies Reilly Industries and Rutherford Chemicals.

We are very pleased with the outcome of this investment, particularly given the complex nature of the initial corporate carve out of Rutherford Chemicals and the subsequent merger and successful integration with Reilly Industries, said Arsenal managing director Jeff Kovach about the sale. He added that the sale of Vertellus ensured an attractive return to the limited partners supporting Arsenals first fund.

Wind Point hired Rich Preziotti, former vice president and general manager of Honeywell Chemical and Fluorine Products as new CEO of Vertellus. Preziotti said he planned to work with Wind Point and Vertellus management team on increasing sales of pyridine and picoline derivative products, and driving further growth in natural polyols and niche specialty markets. Pyridine is used as a building block in pyrithione biocides. Picolines are used as intermediates in manufacturer of fungicides, herbicides and insecticides.

We are confident that Rich and the management team at Vertellus will create significant value over the lifetime of our ownership through both organic and acquisition-based growth, said Alex Washington, a managing director at Chicago-based Wind Point, which announced the purchase on Dec. 11.

Arsenal supported various capital investments for Vertellus, including the August 2006 expansion of its existing Greensboro, N.C., facility to include a new castor derivatives manufacturing plant and formulation technology center. That facility was part of Vertellus Performance Materials division, which was formed through the combination of Rutherford Chemicals CasChem and Reilly Industries Morflex operating units. Vertellus also has a batch facility in Bayonne, N.J., that operates a castor oil refinery.

Vertellus claims it holds the number one global market position in the production of castor oil derivatives and systems, and citrate polymer additives and systems. Its Lubricin brand of castor oil ester is a highly refined methyl ricinoleate used for lubricating oils, motor fuels, upper cylinder lubricants, cutting oils and gear oils. The companys Citroflex brand citric acid esters are used as lubricant additives and performance enhancers in aqueous and solve-based polymer formulations.

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