Heartwood Collection has secured additional funding to support its rollout into freehold pubs and pubs-with-rooms.
As part of this funding, a new banking facility of £50m has been agreed with OakNorth Bank, the neobank for entrepreneurs, by entrepreneurs. Funds advised by Alchemy Partners have committed £50m to-date and Alchemy Partners is supporting the Group’s rollout, with an expected further £50m investment into the Group to support its growth.
Heartwood has immediate access to this new funding, and it will be used specifically to acquire new freehold pub sites in the right UK locations. The Company continues to seek out active opportunities to buy characterful pubs – where it can renovate and refurbish where required.
This funding comes on the back of strong recent trading (showing positive covers and spend per head growth), a recent rebranding, and progress in acquiring new sites; the Group has already completed the acquisition of 11 freehold sites over the past twelve months and is close to completing on a further five in the summer of 2023.
With the support of OakNorth and Alchemy, the Group will continue to focus on acquiring freehold pubs and pubs-with-rooms with the ambition of reaching at least 60 sites by June 2027. As part of this, Heartwood has the aim of providing nearly 500 boutique bedrooms in the same time period – in a market which remains significantly underserved. This will mean the creation of a further 1,500 jobs up and down the UK, representing a significant contribution to local economies, and take the total number of Heartwood employees to 2,700.
Richard Ferrier, Managing Director of Heartwood Collection, commented: “This additional support from OakNorth and Alchemy is testament to the strength of the business that the team at Heartwood is building. It will enable us to build on our success to date as we focus on growing Heartwood Collection into the UK’s leading premium pubs and pubs-with-rooms business.”
Mark Derry, Chairman of Heartwood Collection, said: “This new funding will be deployed for acquiring additional freehold sites, and it will underpin our target of reaching over 60 sites and 500 rooms over the next four years. While ambitious, we are confident that our combination of highly skilled chefs, warm hospitality and character-filled pubs leaves us ideally placed within a market which is considerably underserved.”
Ben Barbanel, Head of Debt Finance at OakNorth Bank, said: “Heartwood Collection is one of our longest-standing clients and Mark Derry and the team are a great example of the excellent entrepreneurs we have in the UK. The Heartwood Inns and Brasserie Blanc brands are some of the finest the UK hospitality sector has to offer. Despite ongoing economic challenges, the business is set for future growth which is a testament to Heartwood’s leadership and the brilliant team that’s been built. Working alongside the hugely talented team at Alchemy Partners was once again very enjoyable and we hope to complete many more transactions with them in the future.”
Thomas Boszko, Partner, Alchemy Partners, added: “I believe that Heartwood Inns are the best food pubs out there. The pubs provide an offer that guests love, and I’d like there to be a lot more of them, and I’d like them to all be freehold. Oaknorth has been a superb partner to Alchemy many times before, and I am pleased to be working with them again. Their support, combined with Alchemy’s continued equity investment, provides new funding which will help fuel our ambitious growth plans.”