Private equity backers of businesses in the eating and drinking out sector are reassessing the lengths of their investments in the face of economic uncertainty, according to two high-profile investors.
Kieran Lawton of Palatine Private Equity and Jason Katz of Kings Park Capital told last week’s Restaurant & Bar Forum that typical investment periods of three years were now more likely to last for five.
Lawton said: “Looking at some of our investments – we’ve been with Gusto for three years now but would we look to sell it now? No, I think it would be a ridiculous time to do that. The same goes for the Alchemist. The timing has to be right for the transaction, not just the business.
“The general acceptance is that you’re going to hold things for longer. I don’t think we’ll do anything with either of those businesses for 18 months or so.”
Katz agreed saying: “Everyone’s hold horizons are lengthening. Long-term investments are typically for a maximum four-year horizon. I think most people are looking at a four or five-year investment window in the private equity market.”
Asked by panel host Peter Hemington, of BDO, where they would look to invest next, the pair said they both saw plenty of opportunities left in the sector.
Katz said: “I think in casual dining there will be some interesting opportunities but probably six to 12 months away. Wet-led is having a real renaissance. The right pubs are still great business.”
Lawton said: “I’m really interested in businesses like Bounce and Flight Club where there is an experience of something at the heart of it. It’s the same with London Union. What I like about that is the social interaction and bringing people together for something that’s more than just food and drink. You are bringing a reason for people to come together with a high quality food and beverage option.”
