The private members’ club group with 27 locations across Europe, Asia and the United States is led by its majority shareholder, Ron Burkle. A boom in demand for travel stocks is anticipated as the world slowly comes out of the global pandemic. Shares in the hotel company Marriott are up 26 percent, while Airbnb’s share price has increased more than 40 percent since it listed in December.
Soho House, the private members’ club group, is making plans to list in New York as early as next month in order to capitalize on investor appetite for travel and leisure stocks as the pandemic subsides, the Financial Times reported. The company intends to join the New York Stock Exchange with a valuation of as much as $3 billion, despite the closure due to coronavirus restrictions of 11 of its 27 clubs across Europe, Asia and the United States.
Speculation that the target price will rise from a $2 billion valuation set in a $100 million funding round, led by its majority shareholder, Ron Burkle, in June 2020 last year, is based on anticipation of a boom in demand for travel stocks, the Financial Times reported. The hospitality group, which also owns 20 restaurants, 16 spas and two cinemas, declined to comment on the plans.
Shares in the hotel company Marriott are up 26 percent, while Airbnb’s share price has increased more than 40 percent since it listed in December, the Financial Times reported.
Despite steep drops in revenues as a result of sites being closed, Soho House has managed to retain more than 90 percent of its paying members during the pandemic, the Financial Times reported. A typical annual membership costs nearly $2,500 (£1,750).
However, Soho House’s recently filed accounts show the company stopped making interest payments on its loan in cash last year, instead choosing to use a “payment in kind” option, the Financial Times reported. This allows companies with limited cash flow to pay lenders with more debt instead.
Permira Debt Managers, the credit arm of the private equity house, originally provided a nearly $500 million loan to the private members’ club in 2017, describing the debt deal as its “largest ever direct lending investment” at the time, the Financial Times reported. The private debt deal came two years after Soho House had to scrap a $280 million high-yield bond sale, as investors balked at the company’s high leverage and limited free cash flow.
It is the second time Soho House has mooted a stock market flotation, the Financial Times reported. It pulled a planned New York listing in 2018, saying it did not need to raise capital as it had Permira’s backing and its owners—who include Burkle, the hospitality entrepreneur Richard Caring and Soho House founder Nick Jones—did not want to sell out.
Jones, who opened his first Soho House in 1995, told the Financial Times last year that the group did not need to consider a listing as “there is a nice lot of demand from people to invest in the company as it is.”
Over the past 26 years, Soho House has grown rapidly, becoming a hotspot for celebrity guests by targeting wealthy urbanites in the creative industries, the Financial Times reported. According to its 2019 accounts, it made $408 million (£293m) in revenues, 49 percent of which came from food and drink sales and 20 percent from members’ subscriptions with the remainder coming from its own-brand range of homewares. It reported a pre-tax loss of $107 million (£77m). During the pandemic, the group was forced to lay off 1,000 of its 8,000 employees.