Fortress, the private equity investor that lost out in the battle for Morrisons, has acquired Punch Pubs in a deal thought to be worth as much as £1bn.
Punch operates about 1,300 pubs in the UK. It previously had more than 3,000 outlets but sold 1,900 to Heineken when current private equity owner, Patron Capital Partners, took control of the company in 2017.
Punch owns more than 90% of the freeholds of its properties, making it an attractive target for private equity investors. It is also focused on rural and suburban pubs, which have been less affected by the lack of commuters and tourists in city centre-focused chains during the pandemic.
Fortress is one of several private equity groups that are flush with cash and seeking deals in the hospitality sector in expectation of a rebound in demand when the pandemic eases.
Clive Chesser, Punch’s Chief Executive, said the Fortress investment was “very positive news”, adding: “Fortress is a hugely experienced investor who understands the strengths of our business and fully buys into our strategic positioning and business plan.”
Cyril Courbage, Managing Director of Fortress Investment Group, stated that Punch’s management had done “an exceptional job of navigating the challenges of the Covid crisis while positioning the business for long-term growth and value creation” and that Fortress would “continue to explore other opportunities in this sector and across the UK, Ireland and Europe”.
NAM Implications:
- ‘Punch owns more than 90% of the freeholds of its properties’
- This says it all…
- ‘current private equity owner, Patron Capital Partners, took control of the company in 2017’
- …and sold to Fortress PE i.e. within five years.
- This confirms the PE business model in operation….
