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Pub companies have an appetite for expansion

Date: 11/05/2021

Over the past 12 months the hospitality sector has navigated through some of the most difficult trading conditions in its history. Operators have been resilient and innovative creating new outdoor spaces, adopting technology and widening their offering in some instances.

As we emerge from lockdown the excitement from the British public to eat, drink and be merry is abundantly clear. Pubs and restaurants are reporting venues have been inundated with booking requests, many of which are now fully booked for the next few months. However, it’s not just the public that’s watching the sector with excitement as many large pub companies and new entrants raise equity, refinance and look to explore an IPO as appetite for acquisitions grow.

Over a billion pounds has been raised by operators and investors in the past 12 months. These funds will not only help operators navigate through the Covid-19 disruption but ensure these operators and investors are well positioned to capitalise on opportunities as they emerge from this disruption.

Mitchells & Butlers, the UK’s largest listed pub chain, announced a share issue of £350 million, which will be used to repay existing debt taken out due to Covid-19. These funds will also be used to help with new acquisition and capital expenditure across the existing estate.

Pub group J D Weatherspoons completed a second share issue in January 2021 to raise £93.7 million to target new acquisition opportunities in London. The first share issue in April 2020 raised £140 million.

Restaurant Group, a significant player in the UK casual dining market with over 650 restaurants and pub restaurants, recently completed the refinance of its estate providing up to £500 million of debt as well as a share issue of £175 million. This capital will help protect the group from any resurgence of Covid-19 as well as strengthen its ability to expand, putting it in a strong position to benefit from the wider recovery of the sector.

It’s not only established players looking to shore up their balance sheets and position themselves for expansion. RedCat is a new entrant to the sector and has reportedly raised £200 million through private equity backers to focus on distressed opportunities within the pub sector. In addition, NewRiver’s pub company Hawthorn, which owns more 700 pubs, are considering an IPO to raise further funds for acquisitions as they target an estate of 2,000 to 3,000 pubs.

This tells us that there is definitely a growing appetite to start acquiring sites again in the sector and take advantage of any distress that may occur throughout the rest of 2021. However, while there may be some pain in the market, generally there is a lack of stock available to these operators, so for the very best sites that become available we expect to see some fierce competition.

Original article here:

Pub operators and investors are thirsty for deals

Date: 11/09/2021

Over a billion pounds has been raised by operators and investors since the start of the pandemic in anticipation of capturing opportunities that have become available in the pubs sector.

With the industry experiencing a resurgence of activity since the lifting of trading restrictions, operators and investors are now more confident in the future. While there are still a number of challenges that pubs have to overcome, such as staff shortages and supply chain disruption, improved market confidence is resulting in the deployment of much of the capital that has been raised.

Over the summer a number of deals took place. Admiral Taverns, a joint venture between C&C Group and real estate investor Proprium Capital Partners which raised £151 million in June 2021, recently acquired rival community pub company Hawthorn in a £222.3 million deal from NewRiver. The deal sees Admiral acquire 674 venues and it will now operate over 1,500 sites, making it one of Britain’s biggest pub firms.

Punch Pubs & Co completed a £600 million refinance in June and quickly acquired the Ram's tenanted division from Young’s Brewery for £53 million, a process which was handled by Savills. Punch Pubs now operates close to 1,300 pubs in the UK. The proceeds of the sale will provide Young’s with a strengthened balance sheet and capacity to invest further in its existing pubs, and they have also said they will look to acquire freehold managed pubs.

RedCat Pub Company, which was founded in February 2021 by former Greene King boss Rooney Anand and has raised around £200 million to invest in UK pubs, has also been busy. It has completed a number of recent acquisitions including the 18 sites run by the Coaching Inn Group for a reported £60 million, 42 pubs from Stonegate Pub company for a reported £20 million, and four sites from the Knead Pub Group as well as some single sites.

While there’s plenty of activity in the sector, the fact remains there aren't that many sites being openly marketed. With plenty of money waiting to be deployed and operators looking to gain market share, we expect there to be healthy competition for sites that do become available.

Original article here:

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