Redcape sells to Moelis Australia
By Vanessa Cavasinni, editor Australian Hotelier
After years of speculation, one of the country’s largest independent pub groups has sold to Moelis Australia.
One of Moelis’ managed funds has paid $677 million to acquire Redcape Hotel Group, which comprises 25 hotels in New South Wales and Queensland, including 18 of the Top 200 gaming venues in New South Wales.
Both US-based investment firms Varde Partners and York Capital had been toying with purchasing the group for the last two years, but an agreement between all parties was never reached. This is one of the first major purchases for Moelis Australia after listing on the stock exchange (ASX: MOE).
As part of the purchase, Moelis will also invest an extra $40 million into the fund and plans to launch an IPO of the fund in the future. Furthermore, the majority of head office staff at Redcape will be employed directly by Moelis Australia Asset Management, with some of the Redcape executive to be issued more than 400,000 ordinary shares in Moelis Australia.
“We are delighted to have facilitated the acquisition of Redcape on behalf of our managed funds and co-investors. Moelis Australia managed funds have invested in the Sydney gaming hotel market since 2014 and have experienced outstanding returns for our investors. We believe that Redcape represents a leading and unique portfolio managed by a very strong and experienced team at both the executive and operational level,” said Andrew Pridham, CEO of Moelis Australia.
The fund is forecast to deliver an initial cash yield to investors of 8.75 per cent per annum.
Redcape COO Dan Brady is currently overseas on holiday, but a spokesperson for the group said that the acquisition was well received.
“The sale was greatly anticipated and is a great thing for the both for the company and our people.”
Shortly before the sale went through, Redcape sold the Livingstone Hotel in Sydney’s inner west to Oscars Hotel.
Changes in pub funds continue, with Dixon Hospitality shelving its proposed IPO, with reports suggesting that US-based fund KKR – a former investor in Keystone – is looking into making a bid for the company. Meanwhile, the Australian Pub Fund continues to divest its portfolio with four hotels in Sydney and Brisbane still on the market.
Moelis Australia’s acquisition of Redcape is expected to be finalised in July.