Punch Pubs acquired by SoftBank-backed Fortress Investment Group

Punch Pubs has been acquired by SoftBank-backed Fortress Investment Group for around £1 billion, marking the latest in a string of private equity deals in the UK’s struggling hospitality sector. Brother.

The pub group said Wednesday that Fortress has acquired all of its equity from its current private equity owner, Patron Capital Partners, which has owned Punch since it became private. multiplied in 2017.

Punch, founded in 1997 after the Bass Brewery chain of pubs, operates around 1,300 pubs in the UK. It previously had more than 3,000 pubs but sold 1,900 to Heineken as part of the Patron deal.

Two people with knowledge of the terms of the deal said they value the group at around £1 billion. Punch’s earnings for the 12 weeks to 15 August were £14.2m and net debt of £596m following a funding of £600m in June.

Fortress, which has about $54 billion under management, is one of a number of private equity groups, including KKR and Oaktree Capital Management, that are offering cash and seeking deals in the hospitality sector with a period of time. Expect a quick recovery in demand when pandemic restrictions are lifted.

KKR invested £300 million in the low-cost gym group Pure Gym this week, while Oaktree shelled out £200m following the vehicle purchase of the pub by Greene King owner Rooney Anand, Red Cat. Fortress also owns US restaurant group SPB Hospitality and this month took a majority stake in Irish hotel company Prem Group.

Pub groups that own freelance hosting properties are a particularly attractive asset for acquisition groups.

Graeme Smith, chief executive officer of consulting firm AlixPartners, said that if trading is restricted or whatever happens to the operating company, the assets remain valuable.

“There is a lot of demand for hospitality. . . and for real estate investors, if you look at different types of real estate, the pandemic has raised long-term concerns around sectors like office, retail and some supply. housing in terms of where people will live,” he added.

Punch’s assets are valued at £879 million, according to the latest set of accounts for bondholders, and around 93% of the company’s assets are owned or leased.

Owen Shirley, an analyst at Berenberg, said a possible reason for the deal was that Fortress wanted exposure to the UK pub market. “Once you join [value of] he said.

Clive Chesser, chief executive officer of Punch, said the Fortress investment was “very positive news”. “Fortress is a seasoned investor who understands the strengths of the business and fully buys into our strategic positioning and business plan,” he said.

In July, Punch bought 56 ​​pubs from listed company Young’s.

Cyril Courbage, chief executive officer of Fortress Investment Group, said Punch’s management has done “an exceptional job in navigating the challenges of the Covid crisis while positioning the business for long-term growth.” long term and creating value” and Fortress will “continue to explore other opportunities in this sector and across the UK, Ireland and Europe”.

Additional reporting by Kaye Wiggins and George Hammond

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