Duke Street reaps 3.4x from £559m Wagamama trade sale

Kenny Wastell
30 October 2018

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Duke Street has sold UK casual dining chain Wagamama to listed trade buyer The Restaurant Group in a deal giving the company an enterprise value of ТЃ559m.

The sale generated a 3.4x money multiple for the vendor following a seven-year holding period.

Under Duke Street's tenure, Wagamama has increased its number of UK restaurants from 70 to 133, with a compound annual growth rate in UK revenues of 17% between its 2015 and 2018 financial years. The business has also pursued an international expansion strategy, and now operates five restaurants in the US, in addition to establishing a presence in 23 countries across continental Europe, the Middle East and Australasia.

Unquote understands that Wagamama issued around £150m in bonds two years ago, which was increased to around £225m in 2017. A large proportion of the second issuance was earmarked for shareholder repayments.

It is also understood that a number of private equity buyers were involved in the bidding process, in addition to other strategic investors.

The transaction comes amid a troubling period for the UK casual dining space, with former Equistone portfolio company Gaucho the latest high profile business to have struggled. Equistone Partners Europe wrote off its investment in Gaucho in July, with Investec and SC Lowy acquiring the company out of administration the following month.

Previous funding
Wagamama has a long history of private equity backing, having originally received £2.3m in growth capital funding from Graphite Capital (then known as Foreign & Colonial Ventures) in 1996. The firm provided £1.7m in follow-on funding for the company two years later as part of a £3.5m round.

Lion Capital then bought a controlling stake in Wagamama from Graphite in a deal valued at £102.5m in 2005.

Duke Street acquired the business in a tertiary buyout valued at £215m in 2011 with capital drawn from Duke Street Capital VI. Unquote understands the 2007-vintage vehicle remains invested in one further portfolio company; discount retailer The Original Factory Shop.

Company
Founded in 1992 and headquartered in London, Wagamama is a casual dining chain specialising in east-Asian-inspired cuisine. The business generated EBITDA of £43m from a turnover of £307m in the year ending in August 2018, according to a statement.

People
Duke Street – Peter Taylor (managing partner).
Wagamama – Jane Holbrook (CEO).

Advisers
Vendor – Goldman Sachs International (corporate finance); Latham & Watkins (legal).