Nautic takes the Big Train

The Providence, Rhode Island-based firm will spend around $100 million to purchase Big Train, a maker of specialty coffee shop products.

Nautic Partners said today it has acquired Orange County, California-based Big Train, a manufacturer and distributor of powdered and liquid beverage products, for about $100 million. Nautic will acquire 90 percent of the company, while the company’s founders and current management will hold the remaining 10 percent.

Big Train, founded in 1989 by Paul Roy and Craig Meyers, provides products for independent coffee houses to sell in the afternoon once the morning rush has ended. These products include chai teas, blended ice coffees, fruit teas, hot cocoas, smoothie mixes and flavored syrups. The company has more than 7,000 independent and small chain coffee shops in its customer base.

“Big Train has a direct pipeline into a fast growing segment,” said Fraser Preston, a principal at Nautic. “Independent coffee houses are a fast growing business. They’ve grown about 8 to12 percent a year over the past 5 or 10 years, and we think that growth is going to continue.”

Preston said Nautic first became acquainted with Big Train when they were a distributor for a small segment of one of their portfolio companies, Flavor & Fragrance Group. Big Train manufactures 90 percent of its product itself, but it outsources production of one product, a powdered chai tea mix, to FFG.

“We’ve known Big Train for several years now, but it wasn’t until we took a look under the hood that we discovered the extent of the opportunities available to the company,” said Preston.

The acquisition is Nautic’s fourth new investment in 2006. In April Nautic made investments in Curtis Industries Holdings, a manufacturer of enclosures for utility behicles, and 1105 Media Holdings, a company formed to acquire and operate trade publications. In February Nautic acquired Oasis Outsourcing, one of the largest outsourcing companies in the US.

The investment was made from Nautic Partners V, a $1.1 billion fund targeting controlled investments of between $25 million and $75 million in middle-market companies. The firm currently has over 30 active portfolio companies and $1.8 billion under management.