Private equity deal for The Alchemist bar owners undertaking MBO

PRIVATE EQUITY house Palatine has completed a second investment deal with the operator of The Alchemist bar brand.

Having backed a buyout last year of the Gusto casual dining brand, Palatine has sealed a £13m management buyout of The Alchemist.

A £6.5m development and working capital funding line from Santander will enable the business to develop its existing sites and open new venues in city centre locations.

The Alchemist first opened its doors in Manchester in 2010 and currently operates two venues in the city centre, as well as sites in Leeds and London.

Currently employing 250 staff, achieved sales of £11.3m last year and was recently ranked the 20th fastest growing business in the UK by The Sunday Times.

The brand launched in London in summer 2014 and recently extended its Spinningfields, Manchester site, adding an additional 2,500sq ft to meet increased demand.

Formed in 1999 by Tim Bacon and Jeremy Roberts, Knutsford-based Living Ventures has created a number of successful brands, beginning with the Living Room. Its current portfolio includes Australasia, Blackhouse Grills, Gusto, The New World Trading Company, Manchester House and Artisan.

Both Bacon and Roberts will maintain an active role in the business, with Bacon taking on the position as chairman and Roberts becoming a non-executive director. As part of the investment, Palatine’s managing partner Gary Tipper and investment director Beth Houghton will both join the board as non-executive directors.

Beth Houghton, investment director at Palatine Private Equity, said: “The Alchemist is a fantastic brand and has developed a strong customer base as a result of its innovative and theatrical cocktail offering.

“The Spinningfields site continues to be one of the highest trading units in Manchester and we look forward to introducing the brand to more city centre locations across the country.”

Tim Bacon, chief executive of Living Ventures and chairman of Alchemist added: “The Alchemist is a very strong brand which offers a unique customer experience. With the investment from Palatine we will be able to make The Alchemist a recognised brand throughout the UK.”

BDO in Manchester provided corporate finance advice to Palatine, led by M&A director Kieran Lawton and supported by James Gregson. The firm also provided financial due diligence (Chris Heatlie and Robert Dawes) and tax services (Emma Suchland and Lauren Fletcher).

Mr Lawton said: “This is yet another success story from the Living Ventures stable, and is testament not only to the quality of the region’s restaurants and bars but the appetite from investors for scalable, innovative concepts.

“Palatine’s investment will boost The Alchemist’s growth strategy. They have a great management team in place to drive the business through its next phase of expansion.”

Shoosmiths’ team of Kieron Toal, Damien Brown, Kelly Harvey and Ruth Evans provided legal advice to Palatine and Pinsent Masons advised management.