Patron Capital has purchased FSTE 100-listed Punch Taverns using capital from its recently-closed fifth opportunistic real estate vehicle, in a deal which valued the pub company at £1.8 billion ($2.5 billion; €2.1 billion).
The deal, which was first proposed in December, also valued Punch’s equity at approximately £402 million.
Patron’s partner for the transaction was May Capital, the London-based private equity investor and advisor which has a record of buying assets in the pub and drinks industry.
Patron funded the purchase using capital from its fifth opportunistic real estate vehicle, which it closed in July after collecting around $949 million from a string of global investors. The firm, which is led by managing director Keith Breslauer, did not disclose its return target for the deal. However, it has publicly stated that its average return over its 17-year history was around 15 percent.
Once the 3,200-strong portfolio of pubs had been acquired, Patron set up a joint venture with beer giant Heineken and immediately sold 1,900 assets to the Dutch company, keeping the remainder.
Patron and May said they would be enhancing the portfolio’s value by modernizing the current pub stock and selling non-core assets.
Punch is the second largest owner of pubs in the UK, behind market leader Greene King, with 3,200 drinking establishments nationwide. Around 96 percent of these assets are held either on a freehold or a long leasehold basis.
Breslauer said Patron’s strong track record in turning around operating companies in recent years would be a major asset to Punch in the coming years.
“We are experienced investors in the leisure and hospitality sector, having invested in and grown a range of businesses. 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,” Breslauer added.
Patron has deep experience in buying and selling non-traditional real estate assets, having sold its Generator Hostels portfolio in March for €450 million. In October 2015, the firm also sold the Jupiter Hotels portfolio for £160 million just four years after acquiring them for £111 million. In June of the same year, it sold its petrol station forecourt business, Motor Fuel Group, for $500 million. Another deal, the 2013 sale of Manchester Arena for £82 million, three years after buying it for £62 million, further demonstrated the firm’s thirst for alternative assets in European real estate.
Patron and May were advised by NM Rothschild & Sons.