Patron Capital completes £1.8b acquisition of Punch Taverns
Patron Capital has completed its £1.8 billion ($2.3 billion) acquisition of Punch Taverns Plc.
Punch is a leading owner of tenanted pubs in the United Kingdom. Its portfolio comprises approximately 3,200 pubs located across the United Kingdom, 96 percent 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 securitizations, the Punch A Securitization (approximately £770 million/$992 million of gross debt secured against around 1,900 pubs) and the Punch B Securitization (approximately £550 million/$708 million of gross debt secured against around 1,300 pubs), as well as certain cash resources held across the Punch Group. Punch also owns approximately 50 pubs outside of the securitizations.
The Punch A Securitization has been sold to Heineken U.K. in a back-to-back transaction, which is set to complete next week, for approximately £305 million ($393 million) in equity value, representing an enterprise value of around £1.2 billion ($1.6 billion). 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 this investment is May Capital.
With a renewed level of operational and investment focus made possible by a sale of the Punch A Group to Heineken, Patron and May Capital expect to continue to pursue, and in some cases accelerate or enhance, key elements of the Punch management team's strategy, including investing in the pubs, adapting and modernizing operating models such as through the roll-out of the managed operating format, and continuing to sell noncore assets.
Patron’s equity for the purchase came from its fifth fund, which closed last summer having raised €949 million ($1.2 billion).
