London-based Nightcap, a company that organically acquires and grows beverage-focused businesses, announced on Wednesday August 17 that it had raised £10 million (about 11.78 million euros) in the part of a debt financing round facilitated by HSBC, a multinational universal bank and financial services holding company.
The credit facility is divided into two tranches: a revolving credit facility of £7m (approximately €8.25m) and a term loan of £3m (approximately €3.53m) with a three-year repayment.
The company’s current cash position (including funds in transit) is £6.1m (nearly €7.19m).
Use of capital
Nightcap says the funds will help it shore up its existing debt facilities, totaling £5.5m (nearly €6.48m), across its business. The remaining £4.5m (nearly €5.3m) under HSBC’s new financing package will be used to make capital investments in its new locations as it seeks to expand its presence in major areas of London and other UK cities.
Nightcap has 22 other properties in the offering or in legal talks across the company’s brands, in addition to the 31 open sites and three sites nearing completion of development.
Sarah Willingham, CEO of Nightcap, says, “When we listed Nightcap on AIM and launched a new site and business acquisition program last year, we knew we would want to consolidate our credit facilities with the right partner. banking. The £10 million credit facility will support our growth plans for the years to come as we fulfill our mission for Nightcap to become the UK’s leading cocktail bar group.
What is a nightcap?
Nightcap is looking to capitalize on the opportunity to create a major beverage-focused hotel group. The company currently owns The Cocktail Club, Adventure Bar Group and Barrio Familia Bar Group. Its aim is to acquire, recapitalize and develop beverage-focused concepts with significant potential across the UK.
According to Nightcap, there have been fundamental shifts in the hospitality industry and in guest preferences. Large parts of the hospitality industry have struggled due to high capital costs, high rents, discount offers, rising food prices and a move towards door-to-door delivery – which have all been accelerated by Covid-19. Millennials, in particular, are moving away from mid-market hospitality chains in favor of quality, experience-driven parties at distinctive local-style venues.
These factors have increased the number of available sites, decreased rents, site premiums and capital expenditures, and increased the availability of skilled hospitality workers in the labor market. This is where Nightcap seems to operate. The company is focused on scalable business models that are easy to replicate with the potential for nationwide deployment.
The company believes that in the coming years, beverage-focused business models that target a millennial audience will have an “exceptional” opportunity to thrive alongside reduced competition, given their low operational break-even point, their simple business models and high return on capital.
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