Private equity firm Palatine has mixed up its portfolio with a management buyout of a cocktail bar The Alchemist. The bar chain is part of the Living Ventures Group and the most recent deal is Palatine’s second investment in the organisation. The Alchemist buyout was worth £13 million.
A Rising Star
The Alchemist has quickly become an iconic venue that provides drinks and food for customers in a quirky environment. The first bar in the franchise opened its doors in Manchester in 2010. Since then, the company has expanded by opening up another bar in the Manchester city centre, as well as Leeds and London.
It employs around 250 staff and was ranked the 20 fastest growing business in the country by The Sunday Times.
With £11.3 million sales last year, the company has been looking to expand more aggressively. The private equity deal is going to provide the company the needed capital to grow the business.
Furthermore, Palatine Private Equity is a relatively new Manchester-based company. Founded in 2005, the private equity firm raised £100 million with its first fund in 2007.
The deal will see the private equity firm invest £12 million worth of equity, with Santander bank providing £6.5 million development and working capital facilities. This will ensure the company can expand to new locations, but also to improve its current facilities.
Furthermore, Gary Tipper, a managing partner at Palatine Private Equity, together with Beth Houghton, an investment director at Palatine, will join the board of the company.
Manchester Evening News quoted Beth Houghton saying, “The Alchemist is a fantastic brand and has developed a strong customer base as a result of its innovative and theatrical cocktail offering.”
BDO in Manchester assisted Palatine in financial matters. Shoosmiths was in charge of legal advice for the private equity firm, with Pinsent Masons advising the management.
Living Ventures Group’s Success
The deal is the second successful deal between Living Ventures Group and the private equity firm. Last year, Palatine bought Gusto from the group in a deal worth £10 million. The restaurant chain is a famous chain favoured by footballers and their glamorous wives. The Gusto deal was also a management buyout agreement by the private equity firm.
Living Ventures Group saw its daylight in 1999 and it has since become the owner of some of Britain’s most talked about brands. These include companies like the Blackhouse, The New World Trading Company and Artisan.
Tim Bacon and Jeremy Roberts, the co-founders of Living Ventures Group, will retain a role in the business, with Bacon becoming the chairman and Roberts getting involved as non-executive director.
Mr Bacon was quoted in the Telegraph saying, “The Alchemist is a very strong brand which offers a unique customer experience.”
The deal is an interesting pick for the private equity firm. On the other hand, for Living Ventures Group the deal is another sign of the strong brand building they have done over the past years. It is interesting to see whether other big brands in the group attract private equity investment this year.