Bottoms up! Last week, private equity firm GI Partners has made its first foray into the wine business, with a controlling investment in Duckhorn Wine Company that Napa Valley sources place at roughly $250 million. The company’s labels include Duckhorn, Paraduxx, Goldeneye, Decoy and Migration.
The auction for the Saint Helena, California-based wine company – which has three production facilities and several hundred acres of prime, planted vineyard land in Napa and Anderson Valleys – lasted approximately six months, and included at least one group led by a local vintner who dropped out of the bidding at $220 million, a wine industry source said.
“With 80 investor families it seemed like a good time for us to look at how to monetize their position,” Margaret Duckhorn, the company’s co-founder and executive vice president of sales and marketing, told Wine Spectator last week.
Many of the shareholders who opted to sell had been investors in Duckhorn for 30 years, were aging and looking for liquidity, company president Alex Ryan told the wine-focused publication.
A spokesperson declined comment for GI, which last year closed its second fund on $1.45 billion.
This is Palo Alt-based GI’s first investment in wine country, though the firm often invests in companies that are asset-heavy and geared to people looking to have a good time: The firm also owns the Yates pub group and Orchid Pubs in the UK. (It also owns the 18-acre Sunset Gower film studio in Los Angeles and invested in the Digital Realty Trust, a public REIT focused on technology-related property.)
Several Napa Valley insiders expect private investments to increase in mature, brand-heavy Napa Valley wineries as many founders struggle with succession issues, and the distribution and direct sales of California wines intensifies in the US’ booming wine market.
In 2005, Napa-based boutique investment bank Global Wine Partners announced it is working with a private equity firm on a wine fund, while private REIT Vintage Wine Trust acquired 3 vineyards in California for $73 million that same year. One could argue they’re the sort of investments that get better with age.
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