Terra Firma finds new home for Wizard

London-based Terra Firma Capital Partners has sold Wizard Inns, the 63-strong managed pub group, to Wolverhampton & Dudley Breweries for £96.7 million.

Wolverhampton & Dudley Breweries, the UK quoted brewing and pub group has acquired managed pub estate operator Wizard Inns for £96.7 million (€145.5 million; $175.7 million) from private equity firm Terra Firma Capital Partners. The consideration included approximately £6.8 million in cash.

Terra Firma Capital Partners managed Wizard on behalf of Japanese bank Nomura, the former employer of Terra Firma chief executive Guy Hands. It was the last remaining business of the former pub portfolio that was created by Hands as head of Nomura Principal Finance. The bulk of the estate, which comprised 5,500 pubs at its peak, was sold off as Unique Pub Company in March 2001 to a consortium including Enterprise Inns and several private equity firms.

A spokesman for Terra Firma said the firm’s return on the Wizard investment was not being revealed at the behest of Nomura. He added that Wizard was not big enough to become a major player in the sector in the foreseeable future, and that it was always likely to be sold as soon as a good price was offered. He said Wolverhampton & Dudley was “always the front-runner” once the business had been officially put up for sale in March 2004, despite reported competition for the deal from rival Laurel Pub Company, which is owned by Deutsche Bank.

Wizard’s estate, around half of which is freehold, is located mainly in the south of England and comprises a mix of community pubs and unbranded bars. In the year ended 28 December 2003, the firm generated EBITDA of £12.1 million and operating profits after central overheads of £5.9 million on turnover of £43.8 million. As at 28 December 2003, it had a net asset value of £63.6 million.

Last month, Terra Firma acquired the UK operations of waste management company Shanks for £227.5 million. The deal was the second acquisition for Terra Firma, which raised its debut €2 billion fund in March this year.