Patron Capital has completed its acquisition of Punch Taverns in a deal that gives Punch an enterprise value of around £1.8bn.
Punch has an underlying EBITDA of around £172m and comprises approximately 3,200 pubs located across the UK, 96% of which are held on a freehold or long leasehold basis.
Punch operates its pubs predominantly under the “tied leased and tenanted model”, with a growing number of pubs operated under either a retail operating model or as free-of-tie commercial leases.
Punch is financed through two whole business securitisations, the Punch A Securitisation (approximately £770m of gross debt secured against around 1,900 pubs) and the Punch B Securitisation (approximately £550m of gross debt secured against around 1,300 pubs), as well as certain cash resources held across the Punch Group.
The Punch A Securitisation has been sold to Heineken UK, in a deal set to complete next week, for approximately £305m. Patron will own the remaining pubs as well as the Punch Holding Group. Punch will continue to operate the Punch A pubs for Heineken for six months under a transitional services agreement.
Patron’s partner on the investment is May Capital, the London-based private equity investor and adviser with experience in the pub industry.
Keith Breslauer, managing director of Patron Capital, said: “Completing this complex deal paves the way for an exciting future for Punch as a more focused business. This is a company that has undergone a number of challenges and distractions in recent years but has a portfolio of high quality pubs with excellent future potential.
“We are experienced investors in the leisure and hospitality sector, having invested in and grown a range of businesses including Generator, the Spencer Hotel in Dublin and Jupiter Hotels. Under private ownership, with strong financial backing and our commitment to continued investment, Punch’s pubs and publicans will have our full support to deal with changing market dynamics and provide their customers with the best possible offer.”
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