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Nautic Boxes Cable Deal –

Providence, R.I.-based Nautic Partners closed the acquisition of cable-box maintenance provider Contec Group during the first week of February. Terms of the transaction were not disclosed.

“We specialize in a number of sectors,” Nautic Managing Partner Habib Gorgi said, “and this business touches on three of those, with exposure to manufacturing, business services and communications.”

In fact, Nautic’s most recent exit came from the cable space, when this past November the firm sold off its stake in cable operator Gans Communications. That sale locked in a return for Nautic of 2x its invested equity.

Contec, based in Schenectady, NY, provides repair and maintenance services on cable boxes to both the original equipment manufacturers, namely Scientific Atlanta and Motorola, and the cable companies. Contec also refurbishes and sells digital set-top-boxes and is the exclusive distributor of Motorola digital cable box parts.

Going forward, Gorgi expects most of the growth for Contec to come organically. “This company already controls much of what is a very large marketplace. This isn’t one of those deals where you can go and just acquire a bunch of companies,” he said, adding that opportunities in Latin America and the ongoing adaptation of digital cable in the U.S. should help to further stimulate Contec’s market.

Nautic made a $50 million equity investment in Contec, which came out of the firm’s 2001-vintage Nautic Partners V, L.P. The firm’s fifth fund, a $1.1 billion vehicle, is roughly 60% committed at this point, and Nautic anticipates it will begin fundraising for a follow-up vehicle either later this year or early 2006. To finance the investment, CIT Group, Merrill Lynch Capital and National City Bank assisted with a senior debt facility.

The acquisition represents the first deal for Nautic in 2005. Last year, the firm led the buyouts of Flavor Fragrance Group Holdings, which previously resided in The Jordan Co.’s portfolio, and IPS Group, a maker of plastic pipe adhesives and other plumbing products.

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