European private equity firm Cinven has agreed the sale of all 245 ASK Italian and Zizzi restaurants to Bridgepoint for a consideration of GBP250 million.
This transaction represents Cinven’s complete exit from its investment in the Gondola Group (‘Gondola’ or ‘the Group’), the market leader in the UK casual dining sector, following the sale of the PizzaExpress and Byron restaurant brands separately for a combined consideration of approximately GBP1 billion. This sale brings the total sale proceeds to approximately GBP1.3 billion, generating a money multiple of 2.4 times.
In the UK, Zizzi and ASK operate 136 and 109 restaurants, respectively, and performance has been strong over the last three years with 22% compounded EBITDA growth, despite the challenging consumer environment.
Cinven invested in Gondola in 2007 via a public-to-private transaction from the London Stock Exchange. During Cinven’s ownership, the Group’s key achievements have been:
• PizzaExpress – significant UK growth and internationalisation. In the UK, over 130 restaurants were opened, bringing the UK estate to 436 restaurants, and creating around 2,500 jobs. The international operations were acquired in 2010 and openings were accelerated, including the significant expansion of new restaurants in China; at exit there were 68 sites outside the UK. As a result of proving the model internationally, PizzaExpress was sold to Hony Capital, a Chinese private equity firm, in July 2014 for approximately GBP900 million; Hony intends to continue to support the brand’s growth in the UK and Asia;
• Byron – development and roll-out of a new burger brand. The brand was conceived and launched under Cinven’s ownership in 2007. By 2013, Byron had grown to 34 sites with a strong pipeline of additional openings. Byron was sold to Hutton Collins in October 2013 for c. GBP100 million with plans for an accelerated brand roll-out across the UK;
• ASK and Zizzi – under Cinven’s ownership these highly complementary Italian restaurant brands have been completely repositioned, with significant investment over the past four years, and the business is set to benefit from an accelerated roll-out thanks to an identified and secured pipeline of sites.
Cinven was able to achieve these results working alongside Gondola management, by focusing on the following initiatives:
• Appointing a strong management team with Harvey Smyth as CEO, Nick Carter as CFO, Chris Woodhouse as Chairman, together with other appointments across the different brands;
• Accelerating the UK new site roll-out and investment. Cinven had achieved this successfully with other UK leisure investments including Fitness First, Odeon and William Hill;
• Acquiring the international franchise business of PizzaExpress in 2010 as a platform for international expansion. Cinven’s portfolio team in Asia worked closely with PizzaExpress’s management to accelerate the business growth in international markets, particularly in Asia;
• Improving Gondola’s promotional strategy including investment in technology and a proprietary customer database; as well as improving operational efficiencies including cost and procurement savings;
• Maximising value generation through separate realisations of the underlying Gondola restaurant brands where further significant growth potential had been identified under new ownership.
Peter Catterall, Partner at Cinven, says: “We are very proud to have worked with the high calibre management team at Gondola to deliver the growth strategy and accelerate the roll-out of the Group’s different restaurant brands, not only in the UK but also internationally.
“In particular, our Asia portfolio team has been instrumental in facilitating the acceleration of the PizzaExpress Asia opportunity, which was unquestionably a key factor in agreeing the sale of PizzaExpress to Hony Capital earlier this year.”
Charles Miller-Jones, Principal at Cinven, says: “We have worked exceptionally hard with the Gondola management team to maintain UK growth momentum through what has been a challenging consumer environment; create Byron, the market leading burger concept; and transform PizzaExpress from a UK business into a truly international growth story. We are pleased that all of the Gondola brands can continue to prosper under new ownership.”
Harvey Smyth, Chief Executive Officer of Gondola Group, says: "Since acquisition of Gondola in 2007, the Group has benefitted from Cinven's financial commitment and operational support in driving our growth strategy. PizzaExpress expanded significantly in the UK market and made meaningful progress into new and exciting international markets. Byron became a leading brand in a new burger dining category. Finally, ASK and Zizzi enjoyed significant investment in their brands which in combination with an excellent management team has driven its performance in the past 3 years. Overall, the Gondola story since 2007 has been one of tremendous achievement."
