News blog

Eclectic Bar Group / Avanti Capital

• BY: Andrew Hore |
• POSTED: 28/10/2013 |

Eclectic Bar Group, where Avanti Capital owns a 60% stake, is planning to join Aim and raise £10m from a placing, and this flotation should more than underpin Avanti’s NAV.

Eclectic started trading around five years ago after it bought part of the portfolio of bars owned by Po Na Na, the former Aim company that had been placed in administration.  Avanti backed the management and as well as its 60% stake it has loaned £7.3m to Eclectic. The premium bar operator had net debt of £8.2m at the end of June 2013.

As well as raising £10m for the company, the placing will include existing shares being sold by Avanti. Eclectic will use the cash to repay the £7.3m loan from Avanti.

At 56p a share, Avanti is valued at £4.49m. Avanti has a NAV of 143p a share (£11.5m) and Eclectic accounts for 91p a share of the total. That is equivalent to the loan of £7.3m with no real value put on the shareholding.

Odyssey Partners Ltd, which is controlled by Avanti director Richard Kleiner, provides investment advisory and admin services to Avanti. The agreement includes a carried interest in realisations. These realisations have to be worth at least £6.6m, or 82.5p a share, for anything to be payable. The interest is 25% of up to £9.1m of realisations, or 113p a share, and the share increases by five percentage points for each additional £2.5m of realisations. The maximum is 40% of realisations over £14.1m, or 176p a share. There is a provision of £2.55m in the Avanti balance sheet for this carried interest. This reduces the NAV to 130p a share.

Avanti also has stakes in interactive education company Espresso and mobile marketing company mBlox.

Eclectic has 19 sites in England and Scotland and they have various themes. They include Cuban, Polynesian, Japanese and Moroccan. Eclectic plans two or three new bars each year.

Eclectic has grown its revenues from £15.5m to £20.6m in the three years to June 2013. That latest figure excludes the £650,000 of income from managing 33 sites for PBR Leisure – this agreement ended in October. Group EBITDA edged up from £2.9m to £3m bit this appears to include the benefits of the management income.

Eclectic plans to pay dividends with the first payable after the current financial year end.

Download the latest AIM Journal from http://www.hubinvest.com/AIMPDFOctober2013_49.pdf