Stonegate Group Explores Sale of Premium Pub Portfolio

Stonegate Group, which operates popular brands including Slug & Lettuce and Be At One, has begun early discussions with financial advisers regarding the potential sale of a significant portion of its pub estate according to reports.

Industry insiders suggest the hospitality giant is examining options for approximately 1,034 properties from what the company internally refers to as its premium “platinum” portfolio. Market observers believe such a transaction could generate proceeds approaching £1 billion.

The development follows a challenging period for the TDR Capital-backed operator, which currently carries net borrowings exceeding £3 billion. Much of this debt stems from the 2019 acquisition of Ei Group for approximately £3 billion, a deal that positioned Stonegate as the UK’s largest pub landlord ahead of Greene King.

This is not Stonegate’s first attempt to lighten its asset base. The group explored selling a comparable number of sites during 2023, though that process ultimately did not proceed to completion.

Following the unsuccessful 2023 initiative, Stonegate secured £638 million in financing from Apollo Global Management through a securitisation arrangement. This transaction effectively ring-fenced the platinum collection into a separate structure, providing temporary relief to the broader business.

Company leadership is now reviewing strategic alternatives as a key deadline approaches. The Apollo financing includes restrictive covenants that currently prohibit Stonegate from disposing of or refinancing the secured properties. This “non-call period” is scheduled to expire in January 2026.

According to reports Stonegate may pursue a different approach this time, potentially dividing the estate into multiple substantial packages rather than seeking a single purchaser for the entire portfolio.

The operator has faced mounting financial headwinds in recent years. Borrowing costs reached £455 million during the 12-month period ending 29 September 2024, whilst the company reported pre-tax losses totalling £214 million for that financial year.

The licensed trade has been squeezed by multiple factors, including elevated interest rates, increased utility expenses, and substantial rises in employment costs following recent Budget measures that increased employers’ National Insurance contributions and the National Living Wage.

Alongside its financial restructuring efforts, Stonegate chief executive David McDowall—who joined from BrewDog in 2023—has initiated a comprehensive operational review designed to restore profitability.

Central to this transformation strategy is the conversion of several hundred managed houses into tenanted or leased arrangements. This approach reduces direct labour exposure whilst reportedly delivering average profit improvements of £110,000 per converted venue, according to company figures.

Stonegate has grown substantially since TDR Capital acquired 333 venues from Mitchells & Butlers in 2010, establishing the foundation for what would become Britain’s largest pub company.

However, the timing of the Ei acquisition—completed shortly before the COVID-19 pandemic forced prolonged venue closures—has left the business managing substantial leverage throughout one of the most difficult periods in modern hospitality history.

A formal sale process has not yet been announced, and discussions remain at an early.