A Scottish independent pub group is to raise £20m to fund its expansion through acquisitions. The Edinburgh-based Bruce Group Scotland Ltd, which owns 19 pubs in and around the capital, is issuing a £20m bond to fund growth over the next few years.
The bonds will be traded on the NEX Exchange Growth Market under the name Bruce Pubs plc which is a wholly owned subsidiary of the Bruce Group.
The Bruce group, which was established in 1999 by Kevan Fullerton and Scott Piatkowski, owns bars, clubs and music venues in Edinburgh and the surrounding area including the Royal Mile Tavern, George IV Bar, Whistlebinkies, La Belle Angele, and many other well-known outlets. The group has experienced considerable growth in recent years and is seeking the investment in the business to fund greater expansion. The bond will be secured on the venues which are acquired and will attract 7.2% interest.
Kevan Fullerton, director of the Bruce Group, explained: “We believe that the pub market currently offers excellent potential for growth and profitability and we have the scale, expertise, and knowledge of the market to expand substantially in a relatively short timescale. The £20m bond will give us immediate access to substantial funds which will facilitate rapid growth. We will use this investment to quickly grow our group through multiple acquisitions within our existing market and further afield. The bond will offer investors an excellent opportunity to invest in a growing, profitable traditional market that is currently undergoing a resurgence.”
Revenue in the UK pub market was estimated to have risen 0.8% to reach £18.1bn in 2018. An estimated 7.75bn pints were sold over the last year equating to 21.2m pints per day. Whilst the pub market has experienced some contraction in recent years many recent reports, including a recent MCA Insight analysis of the UK pub sector in 2018, have highlighted a substantial upturn in pub revenues with growth particularly in wet sales and among independent pub groups.
Kevan continued: “We are confident that the pub market is ripe for expansion if the right product is offered. Our success has been in developing traditional pubs in excellent locations which appeal to a wide group of people from both the local and visitor market. This idea has worked with our existing portfolio for the last 20 years with some of our pubs recording a 40% increase in turnover during last summer.”
“We think that our model, extended across Edinburgh and into Glasgow and the central belt, will produce a profitable pub group which, although centrally owned and operated, retains the individual identity and character of each pub. We are not creating a chain, we are building a group of individual pubs which nonetheless benefit from experienced management, strong financial backing, and the cost savings which a large group can command.”
Kevan concluded: “The investment will enable us to use our extensive experience and knowledge, supported by former banker Kenneth Hillen as a non-executive director, to expand quickly, effectively and profitably and grow the business into a major force in the hospitality sector. With this combination I believe that Bruce Pubs plc will grow substantially over the next few years.”