Bridgepoint Looking to Boost Pret-a-Manger’s Profits Pre-IPO


August 10, 2015


The British sandwich and coffee chain, Pret-a-Manger might be looking to list next year. The private equity owners of the chain are hoping to improve the company’s fortunes before listing and are even considering a US-listing, according to latest reports.


The Listing Rumours


Pret-a-Manger or Pret, as the company is nicknamed, is considering a 2016 initial public offering, according to Reuters report. The company has quickly spread across the UK and the US, with some stores popping up in Asia.


While the company had a rough start in the US, the company has now managed to turn its fortunes around and the US business is profitable. To some private equity experts, this could well highlight a possible US-listing.


According to Reuters’ sources, which wished to remain anonymous, the “US values restaurant concepts differently. It’s a much more receptive market.”


Naturally, the company might also prefer to go after UK-listing. No British-based restaurant chain has even listed in the US before, so Pret would definitely be venturing into unknown territory if the IPO takes place in the US.


Private Equity Owners


The chain is currently owned by Bridgepoint. The London-based private equity firm got involved with the company in 2008, when it bought a 53% stake in the company for £345 million. It has since increased its share to 65%, having bought Goldman Sachs’ stake in Pret.


The private equity firm is therefore closing in on the typical holding time of four to six years. In an e-mail to Reuters, Bridgepoint partner and spokesman James Murray explained to firm’s future approach by stating, “We said at the time of the refinancing in 2013 that we would extend our holding period for Pret…no decision has been taken about the type or timing of exit”.


But consider the increasing investor appetite, together with Pret’s improved sales figures, the private equity firm might be well on the way for an exit.


Investor Interest


There is potentially plenty of investor interest towards the company and the firm might well consider a potential sale over listing in the near future. But there’s also a lot of interest for Pret shares, especially in the US.


According to one private equity banker who spoke to Reuters, “Pret’s cash generation is all in the UK, but the growth opportunity is all in America,” and cracking the US potential could be vital in a successful listing.


The company has so far remained less ambitious about growth, having learned its lesson with previous aggressive tactics that went sour. Furthermore, the US has plenty of competition in the market. According to Statista, the US could have well over 157,000 quick service restaurants by the end of the year and listing in the country might not be the best option for the British company.


Considering the previous deals in the industry by private equity and trade buyers, especially from Asia, the favoured exit route for the private equity firm might be a sale to another owner.


DealMarket will continue to see how the situation develops. In the meantime, you can find private equity deals at the DealMarket platform.

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