Sarah Willingham Nightcap (1)

Nightcap has announced plans to raise £3.5m in new investment via the issue of new shares.

It comes as the late night group looks to capitalise on stress in the market and consolidate the bar sector, as rival companies consider their strategic options.

The 46-strong bar operator plans to issue of up to 70,000,000 new ordinary shares of £0.01 each in the company at a price of five pence per share.

As part of the fundraising, the company has already raised £0.75 million through a firm subscription for 15,000,000 new ordinary shares.

In addition to the subscription, the company has received further expressions of interest in participating in the fundraising and intends to continue its fundraising activities in the coming weeks, with further announcements to be made in due course.

The board will also consider raising additional capital, subject to any future potential transactions, and said it has received expressions of interest for “significant further conditional investment support”.

The company will be convening a general meeting of shareholders to agree the issue of shares and fundraising plans.

Sarah Willingham, chief executive of Nightcap and the group’s largest shareholder, said: “We believe that a once in a generation opportunity currently exists in the late night bar sector to create a substantial market leading group of the most popular and much loved late night bar concepts. It was always our intention to position Nightcap as the preferred consolidator in the premium bar sector and with this fundraising we intend to continue our efforts to create the UK’s leading bar group.

“A combination of businesses struggling with significant debt from the COVID period, ongoing macro-economic challenges from the cost-of-living crisis, and rail strikes have all escalated and accelerated the opportunity for consolidation, as we see a number of companies from across the sector considering their future strategic options.

“It is core to our strategy to be present in the conversations that will shape the late night bar sector in the UK as we approach the next economic cycle, with a more positive outlook on real wage growth, lower inflation, coupled with anticipated lower interest rates, which is expected to lead to an improvement in consumer confidence.

“Over the last 18 months, we have built a robust and professional management and leadership infrastructure at Nightcap and our team is capable of doubling the number of bars that it manages without the need for Nightcap to make significant further investment.”

Nightcap has completed five acquisitions since 2021. It believes further opportunities will arise in the coming year for further consolidation of the premium bar segment, as the sector moves from incremental M&A activity to a more fundamental shift, as many of the operators in the sector undergo significant change.

The fundraising will enable Nightcap to strengthen its balance sheet, so it is well positioned strategically when future consolidation opportunities arise.

The subscription shares will represent approximately 6% of the company’s issued share capital.