The operator of private members’ clubs recently raised $100 million from new investors to fund a doubling of its size. Over the last year Soho House has opened up another five “Houses” and two “Townhouses,” including Soho House Dumbo in Brooklyn, N.Y. It now has around 89,000 members worldwide, with another 36,000 on a “global waiting list.”
Billionaire Ron Burkle’s Soho House group hit a $2 billion valuation after raising $100 million from new investors to fund doubling the size of its chain of hotels and private members’ clubs around the world, Forbes reported. The valuation marks a solid return on the investment for Ron Burkle’s investment fund Yucaipa, which took a majority stake in the elite hospitality group for $321 million in January 2012.
Over the last year Soho House has opened up another five “Houses” and two “Townhouses” including White City (London), Dumbo (Brooklyn, N.Y. City), Amsterdam (Netherlands), Little Beach House Barcelona and Soho House Mumbai, Forbes reported.
Marking something of a turnaround and lifting some of the gloom over the company’s estimated $500 million debt pile, Soho House recently announced turnover was up 20 percent to $556 million, driven by membership subscription income up 30 percent to $135 million and strong food and beverage sales up 20 percent to $245 million, Forbes reported.
Nick Jones, Founder and CEO of Soho House, said that over the year Soho House has taken an “important step” towards becoming “a truly global members network,” Forbes reported. Expansion plans are afoot and in 2020 and 2021 Soho plan to open new venues in Paris, Austin, Mykonos, Rome, London, Tel Aviv, Nashville and Brighton.
However, last year Chief Financial Officer Peter McPhee confirmed the company was still in “growth mode” having made a pre-tax loss of £65 million ($83.3 million) in 2018, up from £60 million ($76.9 million) in 2017, Forbes reported.
Soho House was founded in London in 1995 as a private club for people in the “creative industries” and media, Forbes reported. In 2012 Ron Burkle bought 50 percent of restaurateur Richard Caring’s 80 percent stake in the business, and 10 percent from founder Nick Jones.
Jones added that he was “delighted” to announce a new equity investment in the business from real estate trust Simon Property Group and Raycliff Capital, founded by entrepreneur Bippy Siegal, Forbes reported.
Valuing the company at $2 billion, a Soho House spokesperson confirmed to Forbes, “The new shareholders have taken a 5 percent stake and existing investors [Nick Jones, Ron Burkle, Richard Caring] have been diluted proportionately.”
David Simon, Chairman and CEO of Simon Property Group, confirmed that the move marked “a strategic investment … in a business that has already demonstrated impressive like-for-like growth over the last 22 years,” Forbes reported. Adding, “Soho House’s future strategy, to create a truly global membership subscription business that combines physical and digital, was a unique opportunity and something we wanted to be part of.”
Currently Soho House has around 89,000 members in the year to December 2018, Forbes reported, with another 36,000 on a “global waiting list.”
Unconcerned by WeWork’s recent stumbles, Soho House is preparing to launch a global workspace chain called “Soho Works” across North America, Forbes reported. Soho House marketing materials pointedly note that Soho Works is “a new offer that is a completely different model to others in the market.”
Jones confirmed to the Financial Times that Soho Works “bolt-on” workspace could not be compared with troubled co-working firm WeWork, adding “I’m a great admirer of WeWork, but we are [opening far fewer] houses a year. … It is a very different type of expansion.”
Burkle was a member of Soho House for 10 years before buying his stake and was reported by Reuters to walk to the locations in West Hollywood and London from his offices in the U.S. and U.K.
Burkle is described as a friend of former President Bill Clinton, and has worked with Harvey Weinstein on the financing of movies, Forbes reported. With an estimated net worth of $1.6 billion Burkle has invested in tech firms including Airbnb, Uber and Foursquare, and the NHL’s Pittsburgh Penguins.