Golf and country club chain The Club Company has made a neat profit for investors LGV since it was taken private in 2004. Angela Sormani takes a look at the development of the business under LGV’s management.
LGV has sold the golf and country club operator in a secondary buyout transaction to Irish dealmaker Niall McFadden’s advisory business Boundary for £96m, generating around a 2.25x return on its original investment in two years and an IRR of over 50%. Boundary has backed the management team and taken an equity stake in the business.
LGV acquired Clubhaus (former name for The Club Company) for £57m in a public-to-private transaction, when it took the business off the market in May 2004, backing the incumbent management team led by managing director, Charlie Parker. LGV also introduced the ex-managing director of Intercontinental Hotels, Gavin Simonds, as chairman. Brian Phillips and Bill Priestley joined the board from LGV.
When Clubhaus was listed on the London Stock Exchange’s Alternative Investment Market (AIM) it had a market cap of £2.5m. It had £40.5m of senior debt and £16m of high-yield bonds. The deal was structured to ensure the support of both bondholders and shareholders with LGV offering £16.5m for the bonds and the equity. Investors agreed to an offer of 0.2 pence per share versus a share price of 0.25 pence per share. The company’s existing principal bankers, Barclays, agreed to roll over their debt and, together with LGV, helped provide support for the future development of the remaining sites into country clubs.
Bill Priestley, managing director of LGV, said: “The capital structure of Clubhaus in 2004 included senior debt, a high-yield bond and ordinary shares. The bond had escalating interest payments, which were placing an ever-increasing burden on the business and a longer-term solution was required for the company. Therefore LGV was able to acquire Clubhaus at a discount to its share price.”
Since the public-to-private, LGV has supported the business in the development of new health and fitness facilities at Chartham Park, The Warwickshire and Benton Hall. The Club Company now operates 11 golf and country clubs, including The Warwickshire; Castle Royle, near Maidenhead; and Nizels, near Sevenoaks. The clubs are predominantly freehold or long leasehold. The country club format offers members a full range of facilities including golf courses, gyms, swimming pools, spas, sauna, health & beauty, crèche and function rooms.
Priestley said: “We are delighted with our investment in The Club Company. When we acquired the business, we were attracted by its high quality asset base, its differentiated product and the opportunity to undertake new developments at several of its sites. Working with a first-class management team, we have successfully developed the business along these lines.”
This transaction marks the end of a busy month for LGV, having announced three transactions with a total value of more than £540m. In June, LGV acquired South Lakeland Caravans, a lodge and caravan business in The Lake District, and also made another realisation with the sale of Vue Entertainment, a UK developer and operator of cinemas in a secondary buyout transaction to Bank of Scotland Corporate, through its integrated finance team. The bank backed the incumbent management team, led by CEO Tim Richards, in a deal valued at approximately £350m and is taking a minority stake in the business. The transaction also marked an exit for previous investors Boston Ventures and Clarity Partners.