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HIG spinout American Pacific seals first deal

Investing out of its $450m debut fund, the new PE firm bets on the future of a founder-led electrolyte supplement company.

American Pacific Group in its first-ever deal snapped up SaltStick for about $10 million, according to Fraser Preston, who left HIG Capital to launch the private equity shop last year.

American Pacific closed the all-equity deal for the electrolyte supplement company on April 17, investing out of its inaugural fund. The San Francisco, California-headquartered shop closed Fund I on $450 million in February, just two months after fundraising kicked off.

“During this time of [covid-19], where we anticipate [a] recession, we are going to look for smaller deals where we can use full equity,” said Preston, acknowledging that borrowing money is going to be hard.

SaltStick was founded in 2006 by Jonathan Toker, an elite-level triathlete. Although the business has seen its retail segment heavily impacted amid coronavirus, its e-commerce sales have dramatically grown, the managing partner said.

Preston, introduced to SaltStick’s founder a number of years ago, said he’s not concerned about the pandemic’s short-term impact on the sports-centric business: “If the growth rate declines towards zero, that’s immaterial.”

The PE firm, which expects the supplement business to recover from this jolt, intends to grow SaltStick’s e-commerce and distribution channels through additions to its sales and marketing teams, he said.

The acquisition is the first for American Pacific’s newly established holding company, Roadrunner Holdings, which will serve as a platform for “similarly situated businesses serving nutrition or hydration needs,” according to Preston.

Preston most recently worked as a senior managing director at HIG, where he participated in several investments, leading the firm’s acquisition of Quicken, a personal money management software provider.

The investor said he will continue to focus on software and technology at his new venture, although he noted that American Pacific is pursuing a life science deal.

The firm also has flexibility in terms of the check sizes it writes.

“We can go as small as $5 [million] to $6 million in equity or as large as $50 [million] to $60 million,” Preston said.

Action Item: For more information on the investment firm, check out its latest Form ADV

Update: This report has been updated with the correct spelling of SaltStick’s founder, Jonathan Toker.