UK investors Business Growth Fund and NVM Private Equity have committed a combined 10 million pounds ($16.1 million) of growth capital in acquisitive Northern pub chain, Wear Inns. BGF has invested 8 million pounds and NVM has invested a further 2 million pounds in the business, which it has backed since start-up in 2006. BGF will take a minority stake in the business and will join the existing board.
Business Growth Fund (BGF), established to help the UK’s fast growing smaller and medium sized businesses, and NVM Private Equity (NVM) today announced their commitment of 10 million pounds ($16.1 million) of growth capital in acquisitive Northern pub chain, Wear Inns. BGF has invested £8m and NVM has invested a further £2m in the business, which it has backed since start-up in 2006. BGF will take a minority stake in the business and will join the existing board.
Founded in 2006 by local entrepreneurs John Weir (CEO) and John Sands (Chairman), Wear Inns focuses on the acquisition and management of freehold community pubs across the North East and Yorkshire. The estate currently comprises 15 sites, including The Townhouse in Whitley Bay, Millstone in Gosforth, Black Bull in East Boldon, Cross Keys in Washington, Guidepost in Springwell, New Inn in Durham, Priory in York, New Inn in Wetherby, The Sun in Shipley and the Courthouse in Barnsley. Wear Inns is headquartered in Billingham, County Durham, and currently employs 175 people.
BGF and NVM’s £10m equity investment will enable Wear Inns to acquire further sites over the next few months, creating a further 40 new jobs, and provide flexibility for further acquisitions thereafter.
NVM has backed Wear Inns from start-up and to this point has £4.2m of capital invested in the business. Since then, the company has built up an estate of 15 sites through regional and national acquisitions; from chains such as Mitchells and Butler, Spirit, TCG Inns, Barracuda Pubs and Bars, and Greene King. On average, Wear Inns has succeeded in improving the turnover of its pubs by c90% within six months of their acquisition and refurbishment. In the last three years, Wear Inns has trebled its sales with net revenues now totaling £7.3m and has achieved like for like sales growth of 7.2%.
This is a second investment for BGF in the North of England within six weeks, following its backing of Manchester and Leeds based Mexican food chain, Barburrito, last month. It is also the second co-investment for BGF.
John Weir, co-founder and CEO of Wear Inns, commented:
“Since starting the business six years ago, we have worked with NVM’s support to build up an estate of great community pubs offering good value and good quality across the North of England. We have now reached a point where we want to take that approach a step further with the goal of growing our estate over the next few years. Any acquisition programme requires a level of financial flexibility. So we set out to find an additional partner who could support us in funding further acquisitions. We were also keen to work with like-minded people with a commitment to this region. BGF fits the bill and it’s great to be working with them, as well as our existing backers NVM.”
David Colclough, Manchester based Investment Director at BGF, commented:
“This is a great opportunity to back the proven management team of a fast growing company as they build their business through continued acquisition. With NVM’s support, John and his team have successfully delivered to date, significantly improving the turnover of their pubs in a short time frame in spite of the financial downturn and challenging times for consumers. This investment of £10m will help them to realise their short-term acquisition plans and potential exists for further investment to follow in the future.
”We are also delighted to be co-investing with NVM. This is another great example of where BGF can complement existing investments with supplementary capital. Partnership is integral to the way that BGF operates and we will increasingly look to work with private equity firms, angel investors, venture capital trusts and others to expand the growth capital available for small and medium sized UK businesses.”
Mauro Biagioni, North East Director at NVM, commented:
“NVM entered the pub sector for the first time in 2006 comfortable in the knowledge that we were backing two experienced entrepreneurs with an impressive track record of acquiring and managing pubs. The Wear Inns team have developed a winning formula over the years – transforming dead or dying pubs into quality local premises that offer great beer, great prices and an entertaining experience for the whole family. Six years later, the company is going from strength to strength and has a clear strategy for the future. We are pleased that we can continue to support the team – with BGF’s help – to build their portfolio of pubs.”
In recent years there has been a strong outperformance by the managed pub model where the company owns the freehold and employs its own staff, as adopted by Wear Inns.
Chairman John Sands and MD John Weir who started the business in 2006 have significant experience in the Hospitality sector. Sands developed the Hartlepool based Pubmaster chain into one of the largest in the UK, selling the 3200 pub estate in 2003. John Weir was Retail Director for Bass/M&B, mainly responsible for the North East and North of England before joining John Sands at Pubmaster.
Wear Inns was introduced to BGF by PWC.
The advisers to the transaction were KPMG (vendor due diligence), Watson Burton (lawyers to Wear Inns), Dickinson Dees (lawyers to NVM), and Addelshaw Goddard (lawyers to BGF).
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