A handful of private equity firms are in the running to acquire a stake in Wasabi, the sushi and bento chain.
MCA understands that first round bidding to become a minority equity partner in the c50-strong business has already taken place, with Graphite Capital (backer of Hawksmoor and New World Trading Co); Endless (the turnaround expert that formerly backed West Cornwall Pasty Co); and Rutland Partners (the turnaround expert that recently sold its stake in Pizza Hut Restaurants) amongst its suitors.
A fourth unidentified private equity group is also thought to be in the running for Wasabi, which appointed PwC at the end of October to cash injection.
It is thought that the company, which is led by founder Dung Hyun Kim, has been set an end of year deadline by bank HSBC to secure the new investment.
Earlier this year, the company secured a £30m revolving credit facility from HSBC to support its “ambitious 2018/19 expansion plans”. It has so far opened only one site in Russell Square.
Although the core business is believed to be trading ok, it is thought HSBC had grown concerned on the amount of money spent on its Kimchee restaurant in King’s Cross, believed to c£3.7m, and the £1m invested in developing and opening café concept Soboro in Cambridge.
It is thought that the bank has concerns that management had become distracted by those two projects and that the company’s new central production unit, to which it out £4m, is being underused.
The group said it was looking for an injection of capital to support its next phase of growth which includes the expansion of its “successful UK portfolio, a refurbishment programme of existing stores, further expansion of its US presence in New York, and development of other commercial opportunities for the brand”.
In its most recent published set of accounts, for the year to the end of 2016, the company saw its EBITDA climb 7% to £5.1m, with turnover up 21.4% to £88.2m. It is thought that EBITDA is closer to c£2m on flat sales and that the company is still struggling with a number of highly-rented sites, especially in central London. Therefore, this has led to some speculation that the company is looking to find a partner to allow it go and talk to its banking partner, regarding paying down some of its debt, alongside looking at growth opportunities.