Wynnchurch launches $3bn Fund VI with Chris O’Brien at the helm

Wynnchurch Capital, a longtime specialist in complex investing, is back in the market with a sixth flagship buyout offering.

The target for Wynnchurch Capital Partners VI is $3 billion, according to Rhode Island State Treasury documents. If met, the fund would be the Chicago manager’s largest to date, exceeding the size of the 2020-vintage Fund V by 32 percent.

Wynnchurch is going into its latest fundraising campaign under new leadership, Rhode Island documents said. Chris O’Brien was identified as firm head, evidently replacing co-founder John Hatherly, who has led Wynnchurch for much of its 24-year history.

The news does not appear to have been previously announced. Wynnchurch did not respond to a request for comment.

O’Brien joined in 2000 and was promoted to managing partner in 2017. At the time, Hatherly said he looked forward to “transitioning the leadership of the firm to Chris over the next decade.”

There are three other managing partners: Hatherly, Frank Hayes and Greg Gleason. Gleason, the newest addition, was appointed to the role in 2021.

Wynnchurch operates with a value-oriented strategy focused on distressed, overlooked and underperforming situations. It acquires North American mid-market companies, typically with revenue of $100 million to $3 billion and no EBITDA requirement, via carveouts, MBOs, recaps, restructurings-turnarounds, growth deals and take-privates.

Target companies are well-run and in defensible niches with a sustainable competitive advantage. Sectors of interest are aerospace, defense and government, building products and materials, consumer and food, manufacturing, industrial and transportation, and business services and distribution.

Investing in dislocation

The timing of Fund VI’s rollout is propitious in light of opportunities perceived in an environment roiled by uncertainty and spiking interest rates. Many businesses, especially those which accumulated cheap and easy debt in the years prior to 2022, are expected to face dislocation, spurring complex dealflow.

Wynnchurch invests $50 million to $750 million of equity per platform. Fund VI is expected to build a portfolio of 16-22 companies, Rhode Island documents said.

Wynnchurch was founded in 1999 by Hatherly and two former principals. Before, he was a senior executive in GE Capital’s merchant banking group.

The firm reports making more than 135 platform and add-on acquisitions since inception. Over the same period, it generated a 1.9x net multiple and a 22 percent net IRR, Rhode Island documents said.

Wynnchurch Capital Partners V was earning a 1.25x net multiple and a 19.7 percent net IRR as of March 2023, according to Maine Public Employees Retirement System.

Recent deals include this year’s sale of Midland Industries, a distributor and manufacturer of fittings, valves, clamps, hose, sheet rubber and related products. Initially backing the company in 2018, Wynnchurch re-invested alongside the buyer, Gemspring Capital Management.

Earlier in the year, Wynnchurch acquired FloWorks, a distributor of critical flow control products, from Clearlake Capital Group. And last December, it acquired Industrial Service Solutions, an industrial MRO services provider, from Edgewater Funds and JZ Capital Partners.