KKR offloads Australian Venue Co to PAG Asia Capital for $1.4b

afr.com:

Australian Venue Co, the operator of dozens of hotels and bars including The Esplanade in St Kilda and Bungalow8 and Cargo in Sydney, will be acquired by PAG Asia Capital for around $1.4 billion, sources said.

Street Talk first reported in June that PAG, advised by Bank of America and Ashurst, was in discussions with AVC’s owner, KKR, to acquire the business. AVC was being advised by Jefferies and Allens.

The Esplanade Hotel is a well-known asset in the AVC portfolio. Darrian Traynor

Despite the change of owner, AVC chief executive Paul Waterson will stay on – as will the rest of the company’s management team. And PAG’s plan sounds remarkably similar to the current strategy – a mix of acquisitions, better use of underutilised space and organic growth.

AVC was slated to make $195 million in adjusted earnings before interest, tax, depreciation and amortisation this year. That’s well above the $112 million forecast in the 2021 pathfinder prospectus.

PAG – which has Melbourne dealmaker Sid Khotkar on the ground – has been increasingly active in Australia in the food category, last year acquiring the Patties Foods business, which makes Australia’s biggest selling meat pie brand, Four’N Twenty. It more recently acquired chicken shop chain, Chargrill Charlie’s, via its Craveable Brands portfolio company.

AVC now operates 210 venues in Australia and New Zealand, and is the second-largest pubs group behind ASX-listed Endeavour Group, which has 344 hotels. KKR bought an 80 per cent stake in the business in 2017 for about $190 million. Minority investors included the company’s management team and former Spotless Group and Healthscope boss Bruce Dixon.