UK chain Pret a Manger ‘may go public in US’ from 2016

High street sandwich chain Pret a Manger may be set to go public next year.

(Picture: Ian West/PA Wire)

The firm’s private equity owner Bridgepoint is considering a US listing as one exit option, following a drive to ramp up overseas profits, a private equity source close to the matter said.

Pret a Manger has already seen interest from potential bidders, the source said.

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Several banking, legal and sector analyst sources said the chain, nicknamed Pret, was well positioned to attempt a 2016 listing.

Pret has 374 stores across the UK, US, Paris, Hong Kong and Shanghai. After years of losses the US business is now profitable, the private equity source said.

This could pave the way for a listing in the United States, where a deeper pool of investors could pay Bridgepoint a higher price, and where there are more similar companies who have successfully floated than in Pret’s UK home market.

“The US values restaurant concepts differently,” the private equity source - who spoke on condition of anonymity - said. “It’s a much more receptive market.”

Pret had core earnings of £76m in 2014, according to its website. A US listing at multiples of 13.5 times earnings, as seen among Pret’s peers, would value it at £1.28bn - over £500m more than at an average UK multiple of 9.5.

Like-for-like sales swelled 9.7 per cent to £594m last year, highlighting the appeal to investors.

London-based Bridgepoint paid £345m for a 53 per cent share in Pret in 2008. It currently owns 65 percent after buying out Goldman Sachs. Pret’s management and founders own 35 per cent.

Pret’s core earnings rose 14 per cent in 2014. In 2013 it raised a £375m loan to refinance existing debt and pay a £150m dividend to owners.

Private equity firms generally invest for four to six years, but Bridgepoint says it is in no rush to sell.

“We said at the time of the refinancing in 2013 that we would extend our holding period for Pret...No decision has been taken about the type or timing of exit,” Bridgepoint partner James Murray said in a statement.

Britain has seen a flurry of chain sales recently, with BC Partners’ acquisition of Cote in July, and Apollo’s Casual Dining Group’s purchase of La Tasca and Las Iguanas.

“The UK is an incubator for casual dining brands now,” said Harry Stoakes, director at BDO. “It’s a huge growth market.”