The number of private equity deals in the leisure sector has doubled in the past year, from 12 to 26, according to global law firm Mayer Brown.
PE funds have been picking up assets at comparatively low prices as the sector recovers, with not all of them turnaround stories it said – the deals in the sector were also focused on growth companies looking to expand.
High-profile transactions in the past year have included Punch Pub’s acquisition by Fortress Investment, Boxpark securing new investment from LDC and Puttshack acquiring new funds from Promethean Investments.
Turnaround funds, in particular, have been looking to buy up businesses in the sector at a discount to their net asset value, said Mayer Brown.
These may have been businesses that were able to ‘stay afloat’ and demonstrate resilience during the pandemic but may still be perceived by other potential bidders as struggling. They may also be facing further difficulties or becoming less of a focus as international travel resumes, it said.
Mayer Brown adds that because UK-only businesses as a whole have been trading at a discount to their international peers, some UK leisure businesses have become particularly attractive to PE funds, Mayer Brown added.
“UK leisure is primed for a bounce back and private equity firms know this,” said Electra Callan, private equity partner at Mayer Brown.
“The sharp rise in deals reflects the confidence funds have in the sector’s turnaround and the growth opportunities available, even for those that have done well from the recent challenges to the sector.
“There are still excellent returns on offer for PE funds in the leisure sector if they look in the right places. In the last 12 months many have clearly taken the opportunity to pick up assets with huge potential.”
