Investment Completion: Torquay Leisure Hotels Ltd

News: Investment News | 31 July 2018

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Private investors check into MBO of Torquay hotel and leisure resort via Connection Capital

  • Connection Capital clients commit £3.5m to unique leisure asset on “English Riviera”

Private investor clients of Connection Capital, the specialist private client investment business, have committed £3.5m of investment into the MBO of a multi-hotel and leisure resort in the top UK tourist destination of Torquay.

Torquay Leisure Hotels Ltd is a unique leisure asset comprising four semi-autonomous 3* hotels with a total of 421 bedrooms and 17 apartments on a seven-acre estate with numerous bars and restaurants on site.

It also boasts an extensive leisure complex which includes indoor and outdoor swimming pools, spa, gym, bowling green, ten-pin bowling alley, children’s soft play area, amusement arcade and eight ballrooms with fully sprung floors.

This diverse mix of attractions means the complex is very popular with group bookings, particularly users of the dance halls and bowling facilities, as well as enjoying a significant volume of “retail” trade from non-guests.

For example, the health club has 1,300 private members. An in-house team also plans a comprehensive entertainment and activity programme particularly during peak family holiday periods.

Connection Capital says these factors provide the resort with a high level of forward bookings and repeat business and helps to deliver an unusually high level of year-round occupancy – all factors which made the business highly appealing to private investors. The asset-backed nature of the investment was also a draw for Connection Capital clients, who were able to participate in multiples of £25,000.

Connection Capital was able to secure the opportunity at a discount to current market value and anticipates attractive risk-adjusted returns. Senior debt for the transaction was provided by Santander.

Located on the “English Riviera” which attracts around three million visitors a year, Torquay Leisure Hotels Ltd was previously family-owned prior to the MBO, having developed from a single guesthouse purchased in 1948. Recent investment has upgraded the hotel accommodations and an annual programme of refurbishment is designed to ensure that rooms are refreshed on a regular basis.

The MBO team consists of three of the most senior day-to-day managers who all have an average of over 25 years’ experience of high volume hotel and leisure management, including Jason Garside, CEO, who joined the business in 2002.

Steve Catling, Head of Structured Debt at Connection Capital comments, “This was an opportunity for our clients to invest in a hotel and leisure resort business quite unlike any other.”

“With its choice of hotels catering to different customer tastes and its array of leisure facilities, Torquay Leisure Hotels Ltd has differentiated itself from the local competition by maximising peak summer holiday bookings and out-of-season and local trade alike. This gives it extremely high forward trading visibility and occupancy levels all year round.”

“We are delighted to back this strong management team, with its intimate knowledge of the company and the market sector, in taking full control of this well-established business.”

Lead Advisory services were provided by Isca Ventures LLP, Financial Due Diligence services provided by Bishop Fleming LLP, Tax Structuring and Advisory services provided by Claritas Tax Limited, Legal services to Connection Capital provided by Gateley Plc.