UK - Dunedin posts 101% IRR on Celtic Inns sale

Guy
20 March 2006

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Dunedin Capital Partners, the UK mid-market private equity house, has announced its second realisation in eight days with the sale of Celtic Inns Holdings Ltd, the Southampton-based pubs operator, to The Wolverhampton & Dudley Breweries Plc for £43.6m.

Dunedin invested £3.5m in Celtic Inns and has generated proceeds of £8.7b from its investment. This represents a 2.5x money multiple and an IRR of 101% over 18 months. This follows on from the sale of Letts Filofax Group, an investment which returned a six times money multiple and an IRR of 52% over five years.

Celtic Inns was formed in 2002 by Duncan Murray and Clive Williams. The company operates a portfolio of predominantly tenanted pubs with the bulk of its 70 pubs being local, community pubs in South Wales and Southern England. The estate, of which approximately three quarters is freehold, comprises 63 tenanted outlets and 7 managed houses.

Sand Aire Private Equity which has been part of Dunedin since its acquisition in November 2005 originally backed the secondary management buyout of Celtic Inns in October 2004 when it provided a £26m funding package alongside The Royal Bank of Scotland.

Dunedin's investment helped Celtic Inns to pursue its expansion strategy of acquiring small groups or single pubs to create a high quality estate. Over the past 18 months, the estate has been increased from 47 pubs to 70. The combination of an experienced management team, strong geographic focus and clear business strategy has driven the growth in the equity during the period of Dunedin's investment.