Luminar chief executive Peter Marks has said he would consider multi-site acquisitions if the right deal came along and admitted a public listing could be “the right place to go”.
Marks, who rescued the company from administration three years ago, told M&C Report that three openings were planned for this year – a new site in Ashford, Kent; a refurbishment of Air & Breathe in Dartford, Kent and a revamp of Liquid in Windsor. He said that with around 50% of refurbishment targets now achieved, the UK’s largest nightclub operator was considering future plans.
He said: “We will look at certain towns, where we feel that they are under-provided for, preferably with students and the town has some kind of vibrancy. I wouldn’t want to take bigger risks at this moment in time – if you have a town that used to be busy but is quiet now we don’t need to be in the market for rejuvenating that town. There are too many inherent risks.
“We would also look at going concern acquisitions on a bit of a multi-site nature. We have run the rule over two or three multi-site companies over the last six months but as yet we have not secured something which we think would be a good deal for Luminar and at the right price.
“We keep an eye on a number of companies and maybe the answer would be to get a growing company and swallow that up and use the balance sheet and buying power and central machine of Luminar to help boost that company. That’s certainly what has happened historically with many companies – they fix what they have got and then they go and look for small roll-outable businesses. But they don’t all work and that’s why we’re cautious. But, of course, you can’t be so cautious that everyone overtakes you.”
Marks said he was keen to explore diverse offerings but insisted the company had to consider the skills at its disposal.
“We see ourselves very clearly as high street, liquor-led operators”, he said. “We aren’t food but we understand the high street so if it was something that opened during the day and the evening that would not bother us at all – that’s very much our skillset.”
He said consolidation in the late-night sector would “inevitably happen because you’ve got a fragmented market”. He said sales would be driven by pressure from private equity as well as banks looking for a return on investments but mergers would also happen organically.
He said for now Luminar’s priority was to “fix what we’ve got” but he said he would never rule out a move to become a listed company again.
“We don’t know what the right exit would be for the current shareholders, or even when it’s likely to happen”, he said. “But I think once we’ve stabilised and proved that nightclubs are an investable, sustainable, predictable cash-generative business then I think the stock market may well be the right place for it to go.”
According to Marks there is renewed optimism within the sector although it is yet to be matched by significant investment.
He said: “There is definitely a sense of optimism. Whether it’s real or not is another matter. There’s a feel good factor, even if it isn’t a real good factor.
“Being in a company with growth always brings that optimism. Some of the big guys have had some readjustments, some fears over takeovers and so the big companies have not been the best places to be. A lot of that optimism has come from the independent sector.
“We need that investment to come back to the sector as a whole because that drives our high streets. None of us can do this on our own.”
He also called on authorities to reduce the burden of red tape on an industry that has “been squeezed so hard by regulation and taxation it can’t take more”.
“There are a lot of things out there that seem like a good idea but as an operator you know can’t work” he said.
“There is very little cost to putting a breathalyser on a door but it has a huge impact. There are so many caveats to how these things work – it has to be 20 minutes since they last had a drink then the higher the reading the longer it takes to reset. Then there’s the issue of how much is too much – the reading depends on the individual.
“It’s hard enough with ID scanners and metal detectors and all of the other paraphernalia people have to go through. It’s socially unacceptable and it’s inoperable.”
