Hawthorn CEO Mark Davies has told MCA the “sky’s the limit” for the pub company when it lists as a separate entity.
Davies said under the current ownership within NewRiver REIT, Hawthorn was limited in its ability of scaling up, and had not always been able to take full advantage of acquisition opportunities.
He said under the proposals, which will see Hawthorn list on the stock exchange as a standalone quoted company, it could achieve its stated aim of becoming the leading community pub operator in the UK.
Under the plan, the business will no longer be bound by limitations of being part of a real estate investment trust, allowing NewRiver to focus on community retail, and Hawthorn to become a pure pub operating company.
Davies said this would make Hawthorn more “nimble and fleet of foot”, and well placed to take advantage of acquisition opportunities as they arise later this year.
MCA understands the process is expected to take around 12 weeks, though this could be quicker given NewRiver is already a listed company, and assuming there is the right demand from institutional shareholders.
Discussing the upsides of the move, Davies told MCA: “From a Hawthorn perspective, it’s a win-win situation. I think the timing is perfect.
“It is great for the management team, because we have a degree of independence that we have not necessarily had previously. We can be 100% focused on growing a business with direct access to capital, rather than having to channel that through NewRiver REIT.
“The sky’s the limit. Whereas, at the moment, I can’t sit here with credibility and say, we could go after this, that and other, buy 300 pubs and get past the 1,000 pub threshold, knowing that community pubs is already 24% of new Rover’s portfolio, and we can only go to 25%.”
Under the plans, Davies will continue to lead Hawthorn as CEO, and step down as a board member and CFO of NewRiver in due course.
He pointed to research which named Hawthorn as the company that had best taken care of its tenants during the Covid crisis as inspiring confidence in the move.
Davies said acquisition opportunities were coming, with consolidation expected in the market “at some point later down the line”, after a few months trading.
“I don’t think we’ve seen much activity yet, but I instinctively feel that will pick up, probably coming out of the 21st of June and beyond,” he said.
“Some commentators have been a bit mischievous talking about distress, but the pub sector is far more robust and sustainable than many people believe.”
Alongside its leased and tenanted model, which makes up 80% of its estate, he expressed a desire to grow its operator-managed division.
Davies added: “We think we’ll bounce back strong when we’re able to open indoors and outdoors. There’s lots of pent up demand out there, the IPO markets have been very strong. We believe the investor demand and support will be there when we need it. It takes us one big step forward to achieving our ambition of being number one community pub operator.”
Hawthorn IPO a ‘win-win’
Hawthorn CEO Mark Davies has told MCA the “sky’s the limit” for the pub company when it lists on the stock exchange as a standalone entity. Davies said under its current structure within NewRiver REIT, the pub business was unable to grow beyond 25% of the group, and so had not always been able to take advantage of acquisition opportunities. He said the IPO plan, which will see Hawthorn strike out alone, will make the company more “nimble and fleet of foot”, and well-placed to take advantage of opportunities when they arise later this year.