Raethorne Raises A Glass
Whiskey distillery start-ups have been ten a penny in Ireland in recent years and the dream for most founders is to sell on the burden to a bigger player. Reaching that finishing line requires huge amounts of work and risk capital, and in June 2022 David Raethorne pulled off a successful exit when Lough Gill Distillery was acquired by Sazerac, a privately owned US drinks company based in New Orleans.
Raethorne (56) operates through Causeway Capital Partners, which he established with Matt Scaife after they built up and exited Helix Health in 2014. To date Causeway has invested in seven portfolio companies and made two bolt-on acquisitions which in total generate c.€150m in revenue and employ c.1,800 people. Its first realised investment was the £100m IPO of In The Style.
Hazelwood Demesne Ltd was incorporated in September 2014 with a view to purchasing Hazelwood House and adjacent 100 acres in Co. Sligo and developing a six-acre whiskey factory complex at the rear of the house. The abandoned Palladian mansion dates back to the 1720s, and the factory unit was a leftover from when Saehan Media made video cassette tapes on the Wild Atlantic Way. Raethorne’s vision was to produce alcohol instead and turn it into whiskey in a new ageing warehouse.
The distillery started producing single malt in volume from January 2020, and currently produces c.1 million litres of alcohol per annum, enough for about 3 million bottles. Hazelwood launched its Athrú brand with bought-in spirits, and before it reached the point of being a volume producer Raethorne reached across the Atlantic to pass the parcel.
Sazerac, best known in Ireland for its Southern Comfort brand, acquired the Paddy
Irish Whiskey brand from Irish Distillers in 2016, with reports suggesting that the Americans paid €90m for the privilege. That deal included a supply agreement, but last year Sazerac was putting out feelers to source its own Irish whiskey stock. Lough Gill Distillery fits the bill. Sazerac also wants to restore Hazelwood House so that the Hazelwood Demesne and the whiskey distillery become a premier visitor attraction on the west coast.
At the end of 2021, Lough Gill Distillery had bulk whiskey stocks valued at €6.3m. Capital investment in the land, premises and equipment totalled €10.6m. The risk capital invested was €16.8m, most of it sourced from Brentwood Investments Ltd and Spaceglen Ltd, two companies controlled by Raethorne and Scaife. Cantor Fitzgerald also had EIIS investors involved, Cyprus investor Houchin Holdings was in for 10%, while Pearse Trust had a small holding too.
Deal consideration was not disclosed but Raethorne & Co would not have sold without a handsome premium, as you could say that Lough Gill had Sazerac over a barrel. Appropriately, the deal celebration party was held in Shanahan’s on the Green, renowned for its American-sized steaks.