Charterhouse in uncharted territory

UK buyout shop Charterhouse Capital Partners has spent £262m (US$477m) acquiring a chain of 160 pubs from PPM Capital.

The acquired portfolio comprises 160 managed pubs and bars including the Smith and Jones, Varsity and Barracuda Bars brands. It is expected that Charterhouse, along with incumbent management, will continue the group’s rapid expansion by aggressively searching out further acquisition targets.

Unlike many UK buyout operators, Charterhouse has no prior knowledge in the pub game, but it does have a demonstrable track record elsewhere in the leisure sector. It has backed, among other names, Tussauds and Coral.

The group is now backing the incumbent management team at Barracuda, led by Mark McQuater, chief executive. A significant proportion of the financing for the deal will be reserved to continue the group’s ambitious expansion plan.

Although the UK pub market has been a significant provider of private equity deal-flow for the last five years, there are still plenty of opportunities for further acquisitions as the larger pubcos continue to streamline their portfolios and smaller regional brewers move out of the pub game altogether.

Barracuda Group was formed in July 2000 for the £50m acquisition of 35 pubs from Enterprise Inns, backed by PPM Ventures. In October 2000, it acquired the Ambishus Pub Company, which operated 61 pubs, for £36.5m. It subsequently acquired, in September 2001, 50 pubs and bars from Wolverhampton and Dudley Breweries for £37.3m. In October 2002, it bought eight pubs from the administrators of Old Monk for £8.2m.