London-based private equity firm Graphite Capital has acquired fast-growing British pub and restaurant business New World Trading Company (NWTC) in a £50 million MBO deal. The principal vendors were Living Ventures, Hill Capital and LDC, the mid-market private equity arm of Lloyds Banking Group (LSE: LLOY)(NYSE: LYG)(ADR). NWTC’s management team, led by CEO Chris Hill, has reinvested alongside Graphite Capital for a stake in the business.

The sale generated a 6.1x money multiple and IRR of 80% for LDC, said the company. LDC originally invested £2.7m for a minority stake in NWTC in 2013 through the Hill Capital Food & Beverage Fund, which was set up to back early stage food and drink concepts. AlixPartners advised the selling shareholders.

NWTC, headquartered in Knutsford, Cheshire, was founded by the late Tim Bacon and Jeremy Roberts as part of the Living Ventures Group, opening its first outlet in 2011. It was spun out in 2013 as part of the transaction, with Living Ventures remaining a significant shareholder, alongside management and LDC and Hill Capital Partners LLP.

NWTC’s former chairman, Tim Bacon, of Living Ventures died recently after a long fight with cancer. Living Ventures Group CEO Jeremy Roberts commented, “It is particularly bitter sweet for me personally to be announcing this news today. Tim was extremely proud of the business model we have created at Living Ventures and this transaction was the last deal we were working on together.”

Today, the business operates 14 outlets throughout the United Kingdom under five brands – The Botanist, The Oast House, Smugglers Cove, The Trading House and The Club House – and employs more than 900 people. Each concept offers traditional cask and craft beers, innovative cocktails, an all-day menu of homemade food including the celebrated ‘hanging kebab’ and live music.

“LDC has been an important part of our growth story over the last three years, supporting our expansion from two to 14 outlets, and backing our vision for the business. We’re excited to be building on that success with Graphite in the years ahead,” said Hill, from NWTC.

“Chris and the team have done an outstanding job of building on Tim and Jeremy’s earlier vision, launching and scaling several award-winning concepts across the UK which have truly innovated the market,” said Tim Farazmand, from LDC.

“NWTC has rapidly established itself as one of the most innovative and respected pub and restaurant operators in the market,” said Omar Kayat, Partner at Graphite Capital. “The company’s multi-branded approach to all day-dining combined with live entertainment in the evening has been hugely successful nationwide. We look forward to helping Chris and his team in their continued expansion across the UK.”

Graphite Capital is a leading independent private equity investor focused on the UK mid-market. The firm has been raising and managing private equity funds since 1981, and has partnered with a large number of management teams across most industry sectors. Over the last 25 years the firm has made over 120 investments, of which over three-quarters have been realized. Graphite has generated an annual return of 35 per cent from these realizations, it says. The firm currently manages more than £1.5 billion of funds for institutional and private shareholders. Graphite raised its most recent fund in November 2013 with total commitments of over £500 million. Graphite operates from a single office in London.

Hill Capital Partners LLP, based in London, was launched in 2010 as the private investment and advisory vehicle of Paul Campbell. Together with LDC, Hill Capital operates a £20m F & B Fund targeted at emerging restaurant and bar businesses. Hill Capital has investments in a number of rapidly developing restaurant F & B businesses including Tortilla, Hawksmoor and Vinoteca. It is also an investor in two hotel businesses, Halcyon Hotels and Resorts, operating luxury family hotel properties in the UK, and Palladian Hotels and Resorts, an acquirer of iconic international hotel properties.

LDC invests in a broad range of sectors and has particular experience in Construction & Property, Financial Services, Healthcare, Industrials, Retail & Consumer, TMT, Travel & Leisure and Support Services. LDC back ambitious management teams from UK-based companies seeking between £2m and £100m of equity for management buy-outs, institutional buy-outs or development capital transactions. The firm was established in 1981 hand has a UK regional network of 9 offices. The firm is part of the Lloyds Banking Group and is authorized and regulated by the Financial Conduct Authority.

Lloyds Banking Group is a major British financial institution formed through the acquisition of HBOS by Lloyds TSB in 2009. HBOS is the holding company for Bank of Scotland plc, which operates the Bank of Scotland and Halifax brands in the UK, as well as HBOS Australia and HBOS Insurance & Investment Group Limited, the group’s insurance division. The group’s history stems from the founding of Bank of Scotland in 1695 by the Parliament of Scotland before the Act of Union, which is the second oldest bank in the United Kingdom. The group’s headquarters is in the City of London and its registered office is on The Mound in Edinburgh. Lloyds Banking Group is a constituent of the FTSE 100 Index. It has a market capitalization of roughly £49 billion.

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