Case Studies

In January 2005, LGV completed the acquisition of Tragus Holdings Limited (“Tragus”), the owner of the Café Rouge and Bella Italia restaurant chains. A £107m funding package was put in place to purchase the group and provide additional capital to support growth in the number of units.

Tragus is one of the largest casual dining restaurant chain operators in the UK, with over 150 sites across the country serving nearly a million meals every month. Its key brands are Café Rouge and Bella Italia along with a brasserie operation comprising Mamma Amalfi, Abbaye, Leadenhall Wine & Tapas Bar and Oriel restaurant in London’s Sloane Square. Based in London, the company employs over 3,800 people.

There were a number of key characteristics that made Tragus an attractive investment for LGV:

• Classic brands. Bella Italia and Café Rouge are established brands that are not fashion led but more resilient. In particular the Café Rouge is an iconic brand that has been in the UK for over a decade and is unique as the only national French chain.
  
  
• Growth of the eating out market. The eating out market has grown by 4% per annum over the last 20 years driven by changing lifestyles and increased disposable income. This has particularly benefited the casual dining sector and we believe that there is still significant growth potential, highlighted by the fact that the UK spends only 35% of total food spend on eating out, whereas in the US, it is over 50% and growing.
  
  
• Market consolidation. There has already been significant M&A activity in the sector including recent flotations and acquisitions of smaller groups such as Loch Fyne, Strada, Wagamama and Carluccios. We believe that further consolidation will occur in the industry.
  
  
• Strong management team. LGV had successfully worked with Graham Turner as MD of the Unique Pub Company previously and introduced Graham as Chief Executive of Tragus to complement the existing operational team of Mohan Mansigani, Finance Director and James Parsons, Chief Operating Officer.

The strategy is to continue investing in the business through opening new restaurants for both the Café Rouge and Bella Italia brands. The target is to open 12 new sites per annum. Recent new openings are generating attractive returns which demonstrate the tremendous potential of the brands. There are also a number of operational improvements that are being made including investment in a new EPOS system. LGV will also look to support Tragus to finance complementary acquisitions where possible.

Tragus continues LGV’s focus on leisure as one of its core sectors with existing investments in Vue Cinemas, The Club Company, Total Fitness and successful former investments in Bourne Leisure and the Unique Pub Company.

LGV completed the sale of Tragus in December 2006. Please click here for further details.