US Hotel owners MCR Hotels is the new equity investors in Soho House
The asset manager, Apollo Global Management is providing around US$800 million in debt and equity financing
Actor and investor Ashton Kutcher will join the board of directors
Kate Moss, Kendall Jenner and Ellie Goulding are celebrity members
Soho House, the operator of private members’ clubs and its in-house Cowshed-branded spas, has secured funding worth US$2.7 billion (€2.3 billion, £2.0 billion) to take the company off the New York Stock Exchange, where it had been struggling.
US hotel owners MCR Hotels is leading new equity investors in Soho House, which will see new investors buy out remaining public shareholders at US$9 (€7.7, £6.7) a share, for roughly 15 per cent of the chain.
MCR Hotels’ chief executive Tyler Morse will be Soho House’s vice-chair and actor and investor Ashton Kutcher will join the board of directors.
The bought-out investors will receive US$1.4 (€1.2, £1.0) more than Friday’s closing price per share, but still US$5 (€4.3, £3.7) less than what they paid (US$14), when Soho House was floated in 2012.
The asset manager, Apollo Global Management, is providing US$700 million (€600 million, £520 million) in debt and equity financing.
Retained stakesFounder and restaurateur Nick Jones will retain 5 per cent; US retail billionaire Ron Burkle will hold onto 40 per cent; and owner of the Ivy restaurant chain Richard Caring will also keep his 21 per cent stake.
US investment bank Goldman Sachs will also retain its 8 per cent stake.
Public company strugglesSoho House has been under pressure to seek outside suitors to secure a higher valuation for the chain.
Last year, an anonymous short seller called Glasshouse described Soho House as having a “broken business model and terrible accounting”, claiming that the company’s
expansion into less affluent cities did a disservice to the brand and obscured that it had not made a profit in its 28-year history.
Soho House’s management conducted an independent review in response, which found “no material issues” in the company’s books.
Industry figures show the chain has lost a cumulative US$739 million (€635 million, £545 million) in the four years it has been listed on the New York Stock Exchange, although it has made a net profit in its past three quarters.
The company struggled to balance global expansion with the promise of exclusivity for its members, of which there are reported to be more than 270,000. Each member pays an annual fee of up to £2,920 (US$4,000, €3,400) a year for access to every property.
Revenue has doubled in the past three years, according to Soho House, which it says has enabled it to become a more efficient business and increase in size more profitably in the past two years.
Soho HouseSoho House, which began in London in 1995, operates 10 locations in London, and 48 that are either open or planned around the world, ranging from Paris and Istanbul to Bangkok and Mumbai. Earlier this quarter, it opened Soho Farmhouse Ibiza.
The chain has four clubs in Los Angeles and three in New York. While it is listed in New York, its main office is in London.
It attracts a celebrity clientele, with Kate Moss, Kendall Jenner and Ellie Goulding among those spotted at its clubs. The Duke and Duchess of Sussex, Harry and Meghan, met on a blind date in 2016 at its 76 Dean Street house in London.
MCR HotelsMCR Hotels owns more than 25,000 guestrooms at more than 150 properties across the US.
It owns the High Line hotel and the TWA at JFK Airport – both of which are in New York, US.
It is also converting the BT Tower in London, UK, into a hotel after reaching a deal last year to buy it for £275 million (US$372 million, €319 million).
