Bravo Albion

[BusyBumbleBee]

Yesterday New River Reit (NRR) made this announcement:

NewRiver is pleased to announce the acquisition of community pub company Bravo Inns Limited ("Bravo Inns") for GBP17.9 million, representing an EBITDA multiple of 6.8x. The transaction is expected to generate annualised outlet EBITDA of GBP2.6 million, equating to a yield on cost of 14%, which excludes GBP0.3 million of synergies expected to be realised through the transfer of Bravo Inns to the Hawthorn Leisure platform. The transaction will be accretive to Underlying Funds From Operations and will further increase dividend cover, which is the Company's key priority.

Bravo Inns owns 44 wet-led community pubs, predominantly located in North West England. The Bravo Inns management have established a high-quality, well-managed and well-invested operator managed portfolio which complements Hawthorn Leisure's existing 660 community pub portfolio.

The acquisition will increase NewRiver's exposure to the highly profitable operator managed pub model. This will provide the Company with opportunities to drive higher returns through accretive capital expenditure and other asset management initiatives, whilst providing the Company with a higher degree of management control and oversight.

{my Bold} see
HTTPS://www.investegate.co.uk/newriver- ... 00094164V/

Albion is a big shareholder here with 50% of the voting rights. And Albion Technology & General VCT PLC owns 28.8% of these. See https://www.albion.capital/sites/defaul ... ersion.pdf page 58. The rest is scattered thru the other Albion VCTs.

This seems to be a good deal for NRR : after all 14% EBITDA is significant and they put out an RNS So the question is : was it such a good deal for Albion? In particular losing that income?

Having done some maths (and I really don't altogether trust my number crunching) I came to the conclusion that it was in the books of the Albion VCTs at these values because it appears twice

~~ Bravo Inns Limited -- £12.033 Million
~~ Bravo Inns II Limited -- £22.304 million
~~ Total : £34.337 million

You can access Bravo web site here : HTTPS://www.bravoinns-corporate.com/about-us/ and if you scroll to the bottom of the page you will see a link to Albion which was still there this morning.

Does anyone know more about this? Cos if they sold both parts then it was not a good deal for Albion

[BusyBumbleBee]

Over on https://www.morningadvertiser.co.uk/Art ... -for-17.9m

Will Fraser gives a quote - which is copyright of the Morning Advertiser and so I cannot reproduce it here but he does say they have completely exited Bravo.

[UncleEbenezer]

~~ Bravo Inns Limited -- £12.033 Million
~~ Bravo Inns II Limited -- £22.304 million
~~ Total : £34.337 million

Following your link to the Albion Tech&Gen report and searching for Bravo, I see on Page 20.
Bravo Inns, 28.8% equity at £1817k value, implying total valuation £6.3m
Bravo Inns II, 15.1% equity at £3368k value, implying total valuation £22.3m

The value of one is falling, of II is rising. If NRR acquired either or both of those for £17.9m that's a big movement on Albion's books!

Until Albion reports, we can only speculate, so here goes.

Possible explanation: those percentages are voting rights. There may be non-voting equity in there too. If it were just the one, and if just 35% of Albion Tech&Gen's stake carried voting rights while NRR's figure encompassed both voting and non-voting parts, that would be a sale at valuation.

Question: might NRR have put out that announcement if what they had acquired was in fact merely a controlling stake such as 51%?

[Kidman]

I am not familiar with these companies but have had a look at their accounts on Companies House.
My guess is that Bravo 1 is the operational company and Bravo 2 holds the freehold and leasehold assets.
This is a common structure in this business and it then makes sense to sell both companies together.

Both of their last sets of accounts have the following detail:-
"The company in jointly owned by its management team Ken Buckley (Director), Philip Dearden (Secretary) and Mark Dean who between them own 50% of the issued share capital, and its investors, funds managed by Albion Capital Group LLP, which own 50% of the share capital. There is no ultimate controlling party."

[BusyBumbleBee]

~~ Bravo Inns Limited -- £12.033 Million
~~ Bravo Inns II Limited -- £22.304 million
~~ Total : £34.337 million

Following your link to the Albion Tech&Gen report and searching for Bravo, I see on Page 20.
Bravo Inns, 28.8% equity at £1817k value, implying total valuation £6.3m
Bravo Inns II, 15.1% equity at £3368k value, implying total valuation £22.3m

The value of one is falling, of II is rising. If NRR acquired either or both of those for £17.9m that's a big movement on Albion's books!

Until Albion reports, we can only speculate, so here goes.

Possible explanation: those percentages are voting rights. There may be non-voting equity in there too. If it were just the one, and if just 35% of Albion Tech&Gen's stake carried voting rights while NRR's figure encompassed both voting and non-voting parts, that would be a sale at valuation.

Question: might NRR have put out that announcement if what they had acquired was in fact merely a controlling stake such as 51%?

Told you my maths was no good, UncleE But as you say even with your correct figures it is a substantial transaction and worthy of an RNS. NRR usually say if it is a joint venture and they are very good at keeping their investors informed.

[barchid]

BBB
A very astute spot on your part, I knew I was aware of Bravo but did not make the Albion connection like you did, despite suffering their blockchain presentation last week and eating their lunch !
However the AAVC half yearly has just come out and says that Bravo was sold, raising (for AAVC) £2.3mill combined proceeds for 1 & 2, which including interest received was a combined return on costs of 1.7 X. In the annual report they were in at a combined value of £2,057k so a rise of approx 11% from book cost.
They also mention the consultation re management fees which I'm sure will interest many of us

[barchid]

Sorry, book value not book cost.