Permira refinances Soho House in £375m deal

The refinancing redeems the borrower’s outstanding public bonds, with all debt now held by Permira.

Permira Debt Managers, the debt management arm of Permira, has refinanced Soho House with a debt facility providing up to £375 million ($481 million, €440 million). The refinancing represents Permira’s largest-ever private debt deal.

The facility is comprised of a £275 million senior secured loan, plus an additional £100 million available should the borrower need more capital to support its growth. Additional terms of the financing could not be determined by time of publication.

Thomas Kyriakoudis, chief investment officer for Permira, told PDI Soho House likely turned to a debt fund for its refinancing, rather than the syndicated loan marketplace, because it wanted flexibility. “I think they liked the lack of complexity,” he said. “A single lender and flexibility.”

Permira first invested in Soho House in 2013, when it participated in a high-yield bond issue the borrower put out in the public markets. In 2015 Permira extended a mezzanine financing facility to Soho House.

“The mezzanine financing did give us an opportunity to get to know the business better,” Kyriakoudis said. With this most recent refinancing, Soho House’s publicly issued debt has now been redeemed with Permira now serving as the single lender.

Soho House had well-documented issues approaching the public debt markets. In 2015, the London-based firm had to pull-back from a £200 million high-yield bond issue following a lack of appetite from potential investors.

According to Kyriakoudis, this incident is explained by investors not fully understanding the borrower’s value and growth plans.

While investors in the past were put off by the lack of free-cash-flow being generated by Soho House, Kyriakoudis mentioned few public investors had taken into account investments the private club company was making in additional locations. “Maybe the public markets didn’t fully understand the company and the story,” he said.

The latest investment is being made from a number of Permira debt funds, including its Permira Credit Solutions III fund. The fund held a first close on approximately €900 million at the end of 2016, having launched with a target of €1 billion earlier that year.

David Brooke contributed to this article.