Earlier this week, Dave & Buster’s announced it planned to sell some senior notes and use the $100 million in proceeds to pay a dividend to its sponsor Oak Hill Capital Partners. The payout comes less than a year after Oak Hill acquired Dave & Buster’s from Wellspring Capital Management. The deal was valued at $570 million.
At first glance, the $100 million may not seem very spectacular. In fact, it looks kind of puny. But consider this. Oak Hill put in about $300 million equity to acquire Dave & Buster’s last year, a PE source says. This means, they’ve already made back one-third of their investment. And Oak Hill has only owned the company for about nine months.
UPDATE: A different source says that Oak Hill actually invested $240 million equity and, with the dividend, is getting back 40%.
Oak Hill, which has offices in Stamford, Conn., Menlo Park, Calif., and New York, has more than $8.2 billion in committed capital. The PE firm acquired Dave & Buster’s, which operates “high volume entertainment/dining complexes” last May. Founded in 1982, Dallas-based Dave & Buster’s is known for more than just its food, but arcade games like “Dance Dance Revolution” and “Spin-n-Win.” The company has 57 venues spread through 24 states and Canada.
Officials for Dave & Buster’s couldn’t be reached for comment. Oak Hill declined comment.