(Photo of new Austin (Texas) Soho House by Cristina Fisher/Austin American-Statesman)
The chain of exclusive private clubs, which recently opened a new location in Austin, Texas, took the next step toward its anticipated public offering by filing with the U.S. Securities and Exchange Commission under the name Membership Collective Group Inc. An e-mail was sent to current members explaining that “this move will enable us to accelerate our investment in improving both the physical and digital elements of your membership” and offering “the opportunity to take part in this next chapter.” A fixed amount of shares, at a number yet to be determined, would be set for each member to buy.
The parent company of Soho House Group, the chain of exclusive private clubs around the world founded by England’s Nick Jones and backed by U.S. billionaire Rob Burkle and restauranteur Richard Caring, has taken another step towards seeking a New York Stock Exchange listing (https://clubandresortbusiness.com/soho-house-takes-more-steps-towards-u-s-registration-and-3b-plus-ipo/), and has contacted its 100,000 members to offer them the chance to purchase shares as part of its initial public offering.
On June 21st, it was announced that Soho House, under the name Membership Collective Group Inc., had begun the process of filing with the U.S. Securities and Exchange Commission for an IPO, Forbes reported. At the same time, The Guardian reported, an e-mail to current members was sent that said, “This move will enable us to accelerate our investment in improving both the physical and digital elements of your membership.
“As a member, you’ve been an essential part of our journey so far,” the e-mail added. “If the initial public offering proceeds, we’d like to offer you the opportunity to take part in this next chapter.”
A fixed amount of shares would be set for each member to buy, The Guardian reported, with that number revealed closer to the flotation of the IPO.
Despite having never been profitable, Soho House has a chance to do well if it goes public, Forbes reported. In 2019, the company was valued at $2 billion after raising $100 million from investors, and the members’ clubs fared relatively well during the pandemic, only losing around 10% of membership during lockdowns, although most of its staff was furloughed.
Many analysts are projecting that the IPO could bring a valuation of as much as $4 billion. As coronavirus vaccination rates rise, Forbes noted, demand for travel, dining, entertainment and other leisure activity is making a recovery in many of the countries where Soho House has clubs, including the U.S. and the U.K.
Burkle, co-founder and managing partner of The Yucaipa Companies, LLC, a private investment firm, currently has about a 60% stake in Soho House, after Yucaipa bought a majority share in 2012 for $321 million. Caring, a British businessman who initially built a clothing business to supply Hong Kong-manufactured fashion to UK retailers and now owns restaurants including The Ivy chain, has a stake of about 30%. Jones, as the Soho House founder, has about a 10% stake.
In the filing, MCG wrote that it plans to raise $100 million through the IPO, Forbes reported. According to the Financial Times, that’s a figure known to be used as a placeholder and may not reflect the company’s goals. It hasn’t yet determined how many total shares will be available and how much they could cost.
After opening its first location in London in 1995 as a private club for people working in media and creative industries, Soho House now operates 28 members-only luxury clubs in nearly a dozen countries around the world, from Austin, Texas, in the U.S., to Mumbai, India, Forbes reported, along with other businesses including Soho Works, Soho Home, The Ned and Scorpios Beach Club.
In 2019, the company signaled its interest in a massive expansion, saying it aimed to double the number of clubs around the world, Forbes reported. And despite the setbacks from the pandemic, the company has plans to open additional houses in 2021, in cities including Rome, Tel Aviv and Paris.
Annual fees for members average in excess of £1,000 (just under $1,400 U.S.) a year, and Soho House had a waiting list of 48,000 applicants at the start of 2021, The Guardian reported.
But revenues almost halved in 2020, from $642 million to $384 million, and the business recorded a $235 million loss.
In the first quarter of the new financial year, losses widened from $45 million to $93 million, as coronavirus restrictions stopped Soho House from opening its UK sites, The Guardian reported. Revenues were $72 million, down from $142 million in the same period the previous year.
Soho House’s first Texas location opened earlier in June 2021, nearly three years after it was originally announced, the Austin (Texas) American-Statesman reported.
The Austin Soho House is located in the city’s recently completed Music Lane development, a mixed-use project that includes office, dining and shopping venues, the American-Statesman reported. It includes a hotel, rooftop pool and club spaces for members to work, eat, drink and relax, as well as a theater, bar and terrace. The site’s 46 hotel rooms were expecte to be available before the end of June 2021.
“We’re really excited to be adding Austin as another place for our members to visit and meet each other,” Sang Aparadh, General Manager of Soho House Austin, told the American-Statesman. “There’s so much going on in the city, I think it will add a lot for our members everywhere,”
Memberships for the Austin location cost between $2,290 and $3,500 annually, the American-Statesmanreported, depending on how much access to other Soho is desired. To attract a younger demographic, members under age 27 get a 50% discount until they turn 30.
The different levels of memberships offered includes “Cities Without Houses,” for users who don’t have a Soho House in their home city but want access when they travel.
“Austin has such an interesting, flourishing creative scene,” Aparadh told the American-Statesman. “Since launching Cities Without Houses here, we’ve seen our local membership grow with creatives from all different industries and backgrounds in Texas. It made sense to have a [Soho] House where they could eat, drink and meet each other, as well as a place for our members all over the world to come to when they’re here.”
As COVID-19 vaccines roll out, Aparadh told the American-Statesman that he is optimistic that the Austin Soho House will soon attract global visitors.
“We’re starting to see more members globally inquire to book bedrooms and move around as restrictions ease, which is really reassuring,” he said. “As a booming city, Austin is a top destination, and we’re excited to welcome both our local and global members to the house in the coming months.”
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