Fortress Investment Group Expands UK Presence with Loungers Acquisition
Fortress Investment Group is making significant strides in the United Kingdom’s hospitality industry through its acquisition of Loungers, a popular pub and restaurant chain, for £351 million, equivalent to approximately $428 million. Announced in a filing on Thursday, Fortress plans to buy Loungers at a price of 310 pence per share, which represents about a 30% premium over the chain’s closing stock price from the previous day. This move highlights Fortress’s belief that Loungers’ market valuation has not sufficiently captured the chain’s robust business performance.
Founded in 2002, Loungers has expanded rapidly, now operating 280 sites throughout England and Wales under its multiple brands, including Lounge, Cosy Club, and Brightside. The company recently went public on London’s Alternative Investment Market (AIM) in April 2019. In conjunction with the acquisition announcement, Loungers reported impressive financial results, with pre-tax profits soaring by 51% to £5.9 million in the first half of October. Revenue for the same period reached £178 million, reflecting a growth of 19%. Co-founder and Chairman Alex Reilley expressed enthusiasm for the future, stating that Fortress would be an ideal partner to help drive Loungers into its next stage of growth.
Fortress Investment Group already holds a diverse portfolio within the UK hospitality sector, encompassing investments in Majestic Wine, Punch Pubs, and Vagabond. The firm has identified Loungers’ strong market position and growth potential as key factors in its decision to acquire the chain. Domnall Tait, Managing Director at Fortress, praised Loungers for its impressive track record, including increased locations, same-store sales, and overall revenues, all achieved despite challenges facing the broader hospitality sector.
Earlier this month, Fortress made headlines with the acquisition of British cinema chain Curzon for a reported $5 million. Curzon’s auction followed financial turmoil faced by its previous owner, American billionaire Charles Cohen, who defaulted on a substantial loan from Fortress amounting to $534 million. This recent acquisition further demonstrates Fortress’s strategy of enhancing its holdings in various entertainment and hospitality sectors in the UK.
Fortress Investment Group manages around $48 billion in assets. The firm is mostly owned by Mubadala Capital, an Abu Dhabi-based investment arm that acquired its stake in Fortress from Japan’s SoftBank for $3 billion. This acquisition was finalized in May after receiving approval from the Committee on Foreign Investment in the U.S. (CFIUS). Mubadala, which boasts $302 billion in assets, positions Fortress for future growth, particularly in the UK market.
Fortress’s history includes being the first private equity firm to go public back in early 2007, garnering a valuation of $7.4 billion during the leveraged buyout boom. Previous ownership by SoftBank, which acquired Fortress in 2017 for $3.3 billion, aimed to leverage Fortress’s expertise for managing its Vision Fund investments. The transformation within Fortress under Mubadala’s leadership suggests a renewed focus on strategic acquisitions and growth in sectors like hospitality, marking an exciting period for the firm and for Loungers as they embark on this next chapter together.
