Pub group Ei is selling £348 million in property to a US hedge fund

Ei Group, the UK’s largest pub company, is selling off the vast majority of its commercial properties to a US hedge fund in what analysts have called a “game changing” £350 million deal.

(Photo: Wiki)

Tavern Propco, a private fund owned by Davidson Kempner Capital Management, has bought 370 pubs and commercial assets from Ei’s portfolio in a deal worth £348 million, leaving Ei with just 42 properties.

The pub company said it will use the money to pay off some of its £2 billion debt and pay shareholders.

Tavern has made a £33.7 million deposit on the sale, which is non-refundable unless shareholders don’t approve the sale.

Rothchild & Co advised Ei throughout the sale.

Ei also said the sale would allow the operator to focus on its core business and publican partnerships business. Last year, the company had just over 3,100 partnership properties.

“We are very pleased to have agreed the sale of the portfolio, which is in line with our strategy of delivering attractive and sustainable returns to shareholders by unlocking the embedded value and optimising the returns from every asset within the business,” Simon Townsend, Ei’s CEO, said.

“The portfolio is comprised of high quality assets which we believe are best suited to a free-of-tie, rent-only business model.”

Davidson Kempner Capital Management, based in Texas, has assets totalling US$31 billion (£24.1 billion) under management, and has a “long track record” of property investment, according to Ei.

Anna Barnfather, an analyst at Liberum, said the deal is a “game changer” for the pub operator, allowing it to quickly cut its total debt and hand money back to shareholders.

“This is not a one off, but should now be an ongoing strategy transferring value from debt holders to shareholders,” she said.