Ian Payne, chairman of Stonegate Pub Company, has said that the TDR Capital-backed group is constantly looking to grow and that his role is to oversee the group’s M&A activity and its capital expenditure, with the group investing c£23m a year across its business.
Talking to M&C, Payne said that there wasn’t a deal that the company hadn’t looked at in the sector over the last five years, including Spirit, Orchid and tenanted packages.
He said: “We didn’t do a deal last year, that wasn’t because we weren’t looking, we just couldn’t get our heads around some of the prices being quoted.”
He said that new chief executive Simon Longbottom had settled in well.
He said: “He is a pub man through and through. I knew his father when he worked at Allied. If he was a racehorse he would come from good stock. He has brought some very talented people into the business. It has changed an awful lot since he arrived and he has brought in people from a cross section of businesses from across the sector.”
Payne would not comment on speculation that the company is preparing an IPO which would value it at £1bn, although it is thought that c630-strong company has lined up three banks to oversee the process.
He said: “Firstly we haven’t made any statement whether we are going to IPO or not. Secondly, I formed this company and have no intention of leaving it.
“The key things for me are M&A, trying to grow the company by acquisitions and overseeing the capex spend. We have the best returns on capital in the business by miles. We get 40% ROC, no-one gets anywhere near us. So I spend a lot of my time making sure we spend the right amount of money in the right places.
“We do 100 investments a year and I visit everyone after they have been completed. I have already been in all of the Maclay Inns sites we acquired earlier this year. I give my feedback whether they like it or not. I chair the capital committee. Every spend over £50k I have to approve or don’t approve. We spend £23m a year on expansionary capex, which is a lot of money for a company of this size. So we have to make sure we get the right returns. Our average investment is c£230k to £240k.
“The challenge from TDR Capital when we started was that we never want a deal to be done in this sector that we haven’t looked at, doesn’t mean we will do it, but we must always look at it. There isn’t a deal that has been done in this sector over the last five years that we haven’t looked at, I include Spirit and Orchid in that. We have never looked outside the pub sector, we are not interested in the casual dining sector.
“We are always looking but it’s a case of what is the best fit for our business and can we get it for the right price. We didn’t do a deal last year, that wasn’t because we weren’t looking, we just couldn’t get our heads around some of the prices being quoted. We also look at all the tenanted packages, the challenge there is to go to say Punch or Enterprise and say we will do a free-of-tie deal.
“We have never set ourselves targets in terms of absolute numbers.”
