Redcape sale plan
If you don’t succeed, try again.
That seems to be the strategy for pub operator Redcape after deferring its initial public offering last year.
Redcape shelved the IPO because of market volatility. And plans to sell Redcape to boutique advisor Moelis and former Sydney mayor and publicam Nelson Meers came to nothing when the parties couldn’t agree on price.
At the time, the talk in the market was that Moelis had offered $650 million for the business whereas Redcape’s hedge fund owners Varde Partners and York Capital were looking at a figure closer to $675 million.
Now Redcape has engaged investment bank Goldman Sachs to approach the market and find a private equity buyer willing to put up $700 million,
The Redcape portfolio has 26 pubs - 23 pubs in New South Wales and three in Queensland - generally with a focus on gaming. Top gaming pubs such as El Coortez and Eastwood Hotels are in the portfolio.
Goldman Sachs has been busy sending out flyers to prospective buyers.
The market speculation is that Goldman Sachs might be looking at potential private equity buyers like Kohlberg Kravis Roberts and Blackstone. There is also a chance that Moelis might be interested in making a bid but none too seriously.
There is also talk in the market of Charter Hall and Woolworths pub operator getting a look in, as they had evaluated the portfolio in the past.
All that might be complicated by the fact that Woolworths is now looking at various options for ALH. It is anticipated that Bruce Mathieson, who has 25 per cent of ALH, will end up buying that business.
The expectation is that the initial bids for Redcape will be in within two weeks.
The key drawcard for Redcape might be those pubs that come with those lucrative slot machines. That’s likely to attract investors looking for anything with a high yield.
by Leon Gettler, 7th September 2016
