Code Hennessy Back With $850M Fund IV –

Joining the ranks of buyout firms that believe bigger is better, Code, Hennessey & Simmons is in the midst of raising its fourth buyout fund, which features a target of $850 million, according to limited partner sources.

The Chicago firm wrapped its third fund in 1997, rounding up $350 million (BUYOUTS Oct. 13, 1997, p. 9). An L.P. in the fourth fund said partners at Code Hennessey have spoken informally about capping Code, Hennessey & Simmons IV at $1 billion. Partners at Code Hennessey declined comment.

The fund is expected to hold a first close in September. Pennsylvania State Employes’ Retirement System already has committed $100 million.

PNC Equity Management, which has invested in the three previous Code Hennessey funds, is considering committing to the fourth fund, according to Peter Del Presto, a senior vice president and principal at PNC Equity. Pittsburgh, Penn.-based PNC Equity has provided mezzanine financing for past Code Hennessey deals, Mr. Del Presto said.

Larger Capital Pool Needs Deeper Staff

One L.P., who declined to speak on the record, said Code Hennessey has been working to build a deeper staff to invest the larger pool of capital. The L.P. noted that no partner at Code Hennessey is in charge of more than four portfolio companies. “They can handle the new fund,” the source said.

Past investors in Code Hennessey funds include Allegheny Ludlum Corp., Illinois State University Retirement System and Washington State Investment Board.

The firm’s investments have focused on the traditional buyout sectors of manufacturing, distribution and consumer products.