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Nightcap to privatise to fast-track M&A
Bar operator Nightcap is planning to delist from the London Stock Exchange to pursue consolidation at a faster pace and lower cost.
Founded in 2020 by former Dragons’ Den star Sarah Willingham, UK-based Nightcap currently owns and operates 46 bars across the UK, following acquisitions of chains such as The Adventure Bar Group, Piano Works and The Cocktail Club.
Since it began trading on AIM (Alternative Investment Market) in January 2021, the company said it has raised approximately £20 million (US$25.3m) to support the growth of the business.
The directors of Nightcap have undertaken an ‘extensive review’ of its AIM listing, concluding that it would be more beneficial to return to private ownership.
Gareth Edwards, chair of Nightcap, said: “We have not taken this decision lightly, however, following an extensive review and deliberation to ascertain the most effective way to maximise shareholder value in the longer term and increase the potential for the long-term success of the company, the board has unanimously concluded that it is in the best interests of the company and our shareholders to cancel our AIM admission and re-register as a private limited company.
“The board believes that Nightcap’s current public market valuation does not reflect the underlying potential of our business or our achievements to date and that this is unlikely to change in the short-to-medium term.
“Since our last institutional fundraise in May 2021, we have demonstrated several times that we can access funding from non-institutional sources at a premium to our share price at the time.”
In May this year, Nightcap said it was aiming to raise up to £3.5m (US$4.4m) to help reach its goal of becoming the nation’s leading bar group through acquisitions.
The company said it had found it difficult to raise funds through shares due to its ‘weak share price’.
Consolidation strategy
Nightcap believes that as a private company it would gain ‘potentially faster and cheaper access’ to investors who are more likely to support its goal of consolidating the UK premium bar sector.
The company has completed five acquisitions – including Piano Works and Dirty Martini – in just over three years as part of this ambition.
Nightcap’s board believes there are opportunities for further consolidation in the coming year as the late-night sector experiences a ‘fundamental structural transformation’.
The bar operator also noted that trading throughout 2024 has remained challenging and it expects this to continue throughout the rest of the year.
The company cited the cost-of-living crisis, above inflation increases to business rates and other costs, as well as the impact of the national living wage increase and ongoing rail strikes as challenges. It also said the ongoing integration of The Piano Works deal has been more costly than initially expected.
For the year ending 30 June 2024, the company said it expected revenue to be in line with current market expectations. However, its adjusted earnings before interest, tax, depreciation, and amortisation (EBITDA) is estimated to be below market expectations due to the factors listed above, as well as the costs from the voluntary cancellation of its AIM listing.
The shareholders will vote on the delisting proposal during the general meeting on 17 July.
Nightcap recently failed to acquire UK-based bar chain Revolution.
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