TGI Fridays U.K. to Float on London Market

Financial Times

TGI Fridays has been a fixture on UK high streets since the first restaurant opened in Birmingham in 1986

TGI Fridays, the American-themed high-street restaurant chain, will be floated on the London stock market as part of the final asset disposals of UK-listed private equity group Electra.
The management of the chain, a fixture on UK high streets since the first opened in Birmingham in 1986, are hoping the timing of the initial public offering in the third quarter of 2021 will meet a predicted post-lockdown surge in consumer spending.

Fridays is the UK franchise of a chain that traces its roots to a restaurant opened in New York in 1965, when its founder co-opted the expression “Thank God it’s Friday!” for what became a popular singles bar.
The business is valued in the listed private equity group’s books at close to £150m, and makes up about three-quarters of Electra’s remaining portfolio by value.
The private equity group said it would also float shoe retailer Hotter on Aim at the end of the year by reclassifying its own listing.

Electra said pandemic market disruption meant valuations reflected “a higher than normal degree of judgment”.

Neil Johnson, chair of the 44-year-old private equity firm, said the restaurant chain was coming out of the pandemic stronger, however, with a new management team and refreshed expansion strategy.
Electra said Fridays would also benefit from the closure of about a fifth of direct competitor restaurants in the past year.

The decision to list the two businesses rather than seek a trade sale comes during a busy period for IPOs in the UK, with the £2.5bn raised through primary issuance so far this year marking the highest level since 2015.

All Fridays’ outlets have reopened this week in line with government guidance on indoor restaurants. Like-for-like sales in the first three days of business following reopening across England and Wales on May 17 grew 76 per cent compared with the same period in 2019, reflecting pent-up demand following the end of the national lockdown.
Fridays carried net debt of £62m at March 31, about double the level in September 2020, with cash of about £21.5m.

Electra, one of the oldest private equity firms in the UK, will close for good after selling its two remaining portfolio companies. Johnson said its management would seek “new challenges” once the company had been wound down.

It has returned more than £2bn to shareholders since 2016, when it began a strategy review of its business. That led to a decision in 2018 to sell its portfolio and return proceeds to shareholders. The corporate shake-up was spurred by activist investor Edward Bramson, who took control of the company in 2015.

Electra shareholders will, in effect, become the investor base for both new companies. Bramson still owns about 30 per cent of the private equity group.