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.
.jpg)
