City Pub Company ploughs on with EIS-funded expansion
Since launching last year,the company has raised £8m under the EIS of tax reliefs for investors. It used the money to buy six pubs in Oxford, Cambridge, Stratford-upon-Avon, Bath and Henley-upon-Thames. And Clive Watson, who co-founded the business with David Bruce and John Roberts, wants to use the next stage of funding to ‘build up a cluster of pubs in each location’.
“We’re confident that we’re going to secure the money and we’ve already identified a number of outlets to add to our existing portfolio,” Watson told BigHospitality. “I’d like to have three in Oxford, three in Cambridge, three in Bath – that sort of thing.
“And then one of those clusters of three will feature a microbrewery, so we can sell it on site and also at the other pubs nearby.
Start-up success
“The location is very important to us. We want to go into the right cities and the right market towns in Southern England. Once we’ve found those locations we want the right premises, which tend to be secondary locations in good market towns and cities.”
Watson and Bruce set up the Capital Pub Company under the EIS in 2001, raising the Government’s limit of £16m and becoming one of the most successful ventures of its kind – the pair sold the business to Greene King in 2011 for £93mwith equity value just north of £70m.
“The EIS worked very well for myself and David,” added Watson. “It’s a great scheme for start-ups like our own - it comes with a lot of corporate governance and it’s not a vehicle to go off and try and raise as much bank debt as possible because investors are looking for a good business strategy.
Waiting game
“It’s given us the equity to build up the long-term value of the business without having to resort to loads of bank finance.”
When it comes to the expansion strategy for City Pub Company, Watson insisted it would be ‘a question of waiting’. “We will look at the location, work out what we think is the right offer and then go from there,” he said.
Any new pubs will feature local beers, local food and local staff and locally-sourced food will play a big part. But Watson added: “we want our pubs to be very accessible to drinkers and diners, rather than there being an obligation to eat.”
RAM Capital is advising on the £10m fundraising. For more information on the HMRC's Enterprise Investment Scheme, click here.
