Code Hennessy cashes in on Baker Tanks

Lightyear Capital finalised its secondary deal for containment-rental company Baker Tanks. Chicago’s Code Hennessy & Simmons, the previous owner, sold the business after a less than two-year stay in its portfolio.

New York-based Lightyear Capital has completed its previously announced acquisition of containment-equipment rental outfit Baker Tanks, the former Code Hennessy & Simmons portfolio company. Terms of the deal were not disclosed, although published reports have put the purchase price at above $500 million (€422 million).

Lightyear Capital is Baker Tanks’ third owner in less than two years.

The acquisition marks a fairly quick exit for Code Hennessy, which had acquired the company in March of last year. The Chicago-based firm clinched the original $275 million acquisition with an $84 million equity investment, and reportedly took a dividend out of Baker Tanks earlier this year. Code Hennessy bought the company from the business interests of the Pritzker family.

Based in California, Baker Tanks rents liquid and solid containment equipment. The company serves a number of industries, including the industrial, environmental, oil and gas, construction and chemical sectors, and rents out units such as steel tanks, intermodal and roll-off boxes, tank trailers and other equipment. The company has seen EBITDA growth in excess of 50 percent since the Code Hennessy acquisition.

Code Hennessy, which raised its fifth fund in February, has put in an active second half in 2005. The firm notched another exit earlier this month, selling Precise Technology to Rexam plc, and has recently logged acquisitions of remediation services company LVI Services, boat manufacturer Godfrey Conveyor and cookie maker Merkel McDonald (the latter two being completed by Code Hennessy portfolio companies).

For Lightyear, the Baker Tanks purchase represents a bet on the fortunes of the containment industry, which Lightyear chairman and CEO Donald Marron referred to as “highly-fragmented and fast-growing”.

Lightyear is currently investing out of its 2001-vintage debut fund The Lightyear Fund LP, a $751 million vehicle. The Baker Tanks deal will likely be one of the last platform investments out of the firm’s inaugural vehicle, as it is currently raising a successor fund, the $800 million targeted Lightyear Fund II.

The firm brought the Caisse de depot et placement du Quebec on board as a co-investor. Baker Tanks management also rolled over a portion of its equity and Goldman Sachs Mezzanine Partners invested in the deal as well.

CIBC advised Code Hennessy on the transaction and Schiff Hardin served as legal counsel. Simpson Thacher & Bartlett provided legal advice to Lightyear Capital.