Graphite makes 10x on noodle bars

Lion Capital has completed its first transaction since changing its name from Hicks Muse, acquiring UK restaurant chain Wagamama for £102.5m.

London-headquartered Lion Capital has acquired a controlling stake in UK noodle bar chain Wagamama from majority shareholder Graphite Capital for £102.5 million (€153 million; $188 million).

An increasing appreciation of Japanese food reflects the growing trend towards healthier eating.

Lyndon Lea, founding partner, Lion Capital

UK mid-market firm Graphite originally invested £2.5 million in Wagamama in 1996 and subsequently invested approximately £7 million of equity in the company.

The transaction represents an overall 10.2x return and an IRR of 40 percent for Graphite, including a £63 million refinancing of the company last September, backed by intermediate capital provider Hutton Collins.

Wagamama plans to open its 50th Japanese style noodle bar in August in London’s Royal Festival Hall. The company’s sales have grown by an average of 32 percent and EBITDA by 41 percent over the last three years according to a press release.

Commenting on the deal, Lion Capital founding partner Lyndon Lea said in a statement: “An increasing appreciation of Japanese food reflects the growing trend towards healthier eating.”

Lion Capital is the new name for Hicks Muse (Europe), the European private equity form born out of Hicks Muse Tate & Furst earlier this year.

The firm is currently raising its first fund as an independent entity, which is expected to close on around €800 million in the next few months.