Buffett adviser invests in whiskey company founded by Raj Bhakta

NEW YORK & SHOREHAM, Vt, January 17, 2019. BDT Capita Partners, a bank founded by Bryan D. Trott, has made a minority investment in whiskey maker Whistle Pig. The price of a bottle of the whiskeys, which come in a variety of ages and editions, retails from $90 to over $550. The amount BDT invested and the share of Whistle Pig it owns was not disclosed.

Trott, a former banker at Goldman Sachs, has advised billionaire and Berkshire Hathaway CEO Warren Buffett on several deals. His BDT Partners is a merchant bank that provides family- and founder-led businesses with long-term capital.

Whistle Pig was founded by Raj Bhakta in 2008. It has grown into a leading vendor of rye whiskey. With the opening of its distillery on its 500-acre Vermont farm in the fall of 2015, WhistlePig has also become one of the leading farm-to-bottle rye whiskeys in the world.

Bhakta was a contestant in The Apprentice TV reality show, which was hosted by Donald Trump before he became president. A n investment banker in New York, in 2006 he unsuccessfully contested for a seat in Congress. He was born to a Gujarati father and Irish mother and grew up in Pennsylvania. .

Bhakta bought the farm in 2007 without a plan for its future. In 2008, when financial markets crashed, Raj moved to the farm to decide on his next career move. Researching scotch whiskeys, he perceived a big potential for premium whiskey made in America. Bhakta told Chicago Bourbon that the market for luxury rye whiskey is worth “Tens of billions….not a billion…TENS of billions”. 

In 2016, he was dismissed from his operating role and board of the company. Bhakta “…was forced out by two board members who accused him of fraud and criminal activity. They raised the allegations during a hastily called meeting in New York where Bhakta was prevented from voting,” according to a report in the Burlington Free Press. https://www.burlingtonfreepress.com/story/money/2016/05/20/whistlepig-founder-thrown-out-his-own-company/84584918/

In 2017, WhistlePig won the “Best in Show Whiskey” title in blind tasting at the prestigious San Francisco World Spirits Competition. In 2010, the company received the highest rating given to a rye whiskey for its 10-Year Old Straight Rye Whiskey with a 96 rating by Wine Enthusiast; it was surpassed by a 97 rating for its 15-Year Old Straight Rye Whiskey given in 2016.

The BDT investment enabled WhistlePig to buy out Bhakta’s remaining stake in the company. WhistlePig’s announcement of the deal stated that Bhakta “…one of the original founders who retired from the business in 2017…has now fully exited his remaining stake.” Most of the other investor partners, several of whom have been with WhistlePig for more than 10 years, will remain investors, the company stated.

Jeff Kozak, WhistlePig’s CEO sated that “2018 was another stellar year for WhistlePig, with our revenues growing by more than 40 percent, more than twice the category, and our operating cash flow close to doubling, allowing us to further expand our distillery and build out our inventory of high quality and aging whiskey as well as expand our distribution. Also, BDT’s experience partnering with founders and entrepreneurs of some of the world’s most iconic brands, their long-term focus as well as their network of successful global business owners, will help us further accelerate our future growth potential.”

“WhistlePig is a dynamic company with a world-class brand, high-quality product and strong leadership team,” said Byron D. Trott, Chairman and CEO of BDT Capital Partners. “We look forward to partnering…(to) further expand the brand both in the U.S. and around the world.”

Rothschild & Co and Skadden, Arps, Slate, Meagher & Flom LLP served as financial and legal advisors to WhistlePig, and Davis Polk & Wardwell LLP served as legal advisor to BDT Capital Partners, LLC.

BDT Capital Partners manages more than $9 billion across its investment funds and $4.6 billion of co-investments from its global limited partner investor base. The firm’s affiliate, BDT & Company, is a merchant bank that works with family- and founder-led businesses to pursue their strategic and financial objectives. BDT & Company provides access to a world-class network of business owners and leaders.

Ultra-premium and luxury rye category defined as all rye whiskies in the U.S. sold at $75 or higher per 0.75L bottle at retail (Source: IWSR 2016)