It’s a sports- and leisure-packed Dealflow this morning, as private equity backs UK retail businesses while the country’s consumers are feeling the pinch in their pockets thanks to inflation and what economists say is the highest tax burden in decades.
Trive Capital Partners has become the latest US private equity firm to make a play for a listed UK company, as it agrees a cash offer with the board of Ten Entertainment Group, which runs 52 sites across the UK that offer 10 pin bowling and other activities.
Next we switch to sportswear as I speak to Jason Schretter of Raine Group about his firm’s recent investment in Castore and how he believes the cash will help the company grow.
Moving on to a different sector, we then finish with a quick update on a deal we reported yesterday – CVC joining Keensight Capital in its investment in French software company Sogelink – as we have since found out the enterprise value.
Yet another US private equity firm has made a play to take a listed UK company private.
Trive Capital Partners has agreed a £287 million ($362 million; €335 million) cash acquisition with the board of Ten Entertainment Group, a 10-pin bowling company that runs 52 sites across the UK.
The offer of 412.5p per share gives a premium of 46.3 percent over the last six months’ average and 49.7 percent over the last 12 months. It is also a 33.1 percent premium to yesterday’s closing price of 310p – the share price had shot up to over 407p at time of writing – and 23.3 percent over TEG’s previous all-time high price of 334.5p in the first quarter of 2020, just before the covid pandemic hit the UK.
It’s also a chunky 150 percent over the IPO price from 2017.
The price gives TEG’s equity a total value of £287 million, implying a multiple of about 7.3x the company’s adjusted EBITDA for the 12 months to 2 July.
Trive has already secured just shy of 40 percent of TEG’s shares via irrevocable commitments and non-binding letters of intent.
In recommending the offer, the TEG board said that while the company has performed well this year, it is “not immune to the highly unstable national and international political outlook together with a volatile economic backdrop, all of which have impacted UK economic conditions and UK consumer confidence as well as having led to significant inflation in certain input costs”.
The directors added that TEG’s shares have “consistently traded at a discounted valuation multiple to its core peers in the public markets”.
“Trive believes that private ownership will enable TEG to achieve its long-term growth potential through continued investment in organic initiatives and strategic acquisition” said Trive partner Shravan Thadani in a statement. “To that end, and given our experience in the consumer and multi-unit retail sectors, we are excited to provide the operational resources, strategic support and capital required to enhance TEG’s next phase of growth.”
Trive is headquartered in Dallas, Texas and has over $4 billion of assets under management.
Cavendish Capital Markets is sole financial adviser to Trive, while Kirkland & Ellis is its legal adviser.
Lazard & Co is sole financial adviser to TEG, while Liberum Capital is its sole corporate broker. Shoosmiths is acting as legal adviser for TEG.
Playing for the jersey
While there’s a lot of speculation as to the future ownership of English football giant Manchester United this week, on PE Hub Europe we’ve spent some time looking at the opportunities for private equity in sports away from the highest profile names.
This morning, we have an interview with Raine Group partner Jason Schretter about his firm’s backing of Castore, a UK sportswear and digital retailing platform.
Raine, via its growth equity fund Raine Partners, led a £145 million ($184 million; €168 million) funding round in Castore in November. It contributed just over half of the total, with investment firms Hanaco Ventures and Felix Capital providing the rest.
The money, along with New York-based Raine’s experience in sports business, will help Castore compete with the big three of Nike, Adidas and Puma in winning contracts with elite teams, said Schretter.
“They would love to continue to grow into bigger and bigger teams,” he added. “As you go up the pyramid it gets more and more competitive. That’s part of what our fundraise is meant for – to have the financial firepower to compete for some of those top-tier teams. Some will be difficult to move, so there’s a gap they need to bridge.”
But Castore will still focus on the teams that have helped it get to where it is today.
While Castore’s client list has big names in sports in cricket and rugby, in the super-rich world of football it has focused on teams with a smaller global profile. Castore’s approach has been to treat those teams like the big three do their top clients, said Schretter.
“We know the problem that Castore is solving because we see it with some of our clients,” said Schretter. “These sports brands and sports teams operate with fan bases of millions, sometimes tens, sometimes hundreds of millions. Yet the service they sometimes get from their partners on the merchandising side is as if they were just another client.”
Looking for value in sports away from the elite teams has been a growing private equity strategy. LBK Capital believes it can find value in what managing partner Ben Rosenzweig told PE Hub Europe was the “nascent asset class” of player transfers with its lower league Italian club Triestina.
Check out the full interview with Raine’s Schretter for more on Castore’s business model and its latest finances.
We found out the enterprise value just after yesterday’s Dealflow went out – it was over €1 billion, we understand.