New J.H. Whitney Fund Attracts Pledges

Firm: J.H. Whitney & Co.

Fund: J.H. Whitney VII LP

Target: $700 million to $800 million

J.H. Whitney & Co., which traces its roots to the dawn of the modern venture capital age, recently launched a seventh fund that has caught the eye of several limited partners looking to take advantage of lower-mid-market growth opportunities.

In mid-May, the Los Angeles City Employees’ Retirement System reaffirmed its faith in the firm with a pledge of up to $15 million to J.H. Whitney VII LP. In April, Michigan State University approved a pledge of $5 million, which represents its first commitment to the firm. And in March, the Pennsylvania State Employees’ Retirement System re-upped with a pledge of up to $25 million.

Although a regulatory filing from March lists an offering amount of $800 million, Michigan State’s board document notes a target of $700 million. The firm did not respond to a request for clarification of the fund’s target size. Its prior fund, raised in 2005, totaled $750 million.

The new vehicle is earmarked for investments in U.S.-based small and mid-market companies with strong growth prospects. Deals will include recapitalizations, as well as investments in underperforming companies with revenues of $50 million to $500 million, according to the Michigan document. Areas of interest include consumer products, specialty retail, health care services, specialty manufacturing and business services.

According to data from the California State Teachers’ Retirement System, J.H. Whitney IV LP, an early-stage venture fund raised in 1999, had generated an IRR of –12.57 percent, as of September 2009, and J.H. Whitney V LP, a buyout fund raised in 2001, had an IRR of 23.75 percent.

John Hay Whitney founded J.H. Whitney & Co. in 1946 to provide “capital and professional assistance to entrepreneurs creating new companies and industries,” according to the firm’s Web site. Its earliest deals involved transforming a WWII-era munitions factory into a fertilizer plant, and backing a company that created Minute Maid Orange Juice. Current portfolio companies include FNF Construction Inc., a highway infrastructure firm; Igloo Products Corp., a maker of ice chests, beverage coolers and thermoelectric coolers; and Joe’s Crab Shack, a chain of casual dining restaurants.