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The battle for the premium pub-goer intensifies as Upham eyes market entry

The battle for the premium pub-goer intensifies as Upham eyes market entry
April 26, 2016
The battle for the premium pub-goer intensifies as Upham eyes market entry

Home counties pub group and craft beer brewer Upham is plotting a £12m listing on the junior Alternative Investment Market, known as Aim, in a bid to cultivate its expansion plans.

The company has 15 pubs at the moment predominantly based in Hampshire, Berkshire and Surrey but it wants to double the size of the estate in the medium term - depending how successful its fundraising is, of course.

It's interesting timing given many of the major pub groups such as Fuller, Smith & Turner (FSTA) and Marston's (MARS) are targeting similarly well-heeled clientele with premium offers which are often, as is the case with Upham, food-led.

The difference with Upham, its spokespeople stress, is that "it is absolutely not a chain". Management prides itself on investing in the pubs but not imposing a particular operating model on its publicans. Each one has an individual feel, they say.

The brewing part of the business is important given it was the genesis of the company - the Hampshire-based brewery opened in 2009 compared to 2012 for its first pub. But the beer is very much in a supporting role here rather than being the star. There are retail contracts in place to sell bottled beer outside the pubs, such as in Tesco (TSCO) stores, but the focus now is very much on expanding its estate.

This might prove sensible given the increasingly competitive craft beer industry. Just on the crowdfunding platform Crowd Cube alone there are 13 breweries which have raised money or are continuing to do so. A sign of market sentiment could be the fact Aberdeenshire-based Brewdog recently missed its £25m fundraising target. Yes, that sum would have been a record-breaking amount raised through community funding and its £19m haul was still impressive, but oversubscribed the fundraising was not.

Back at Upham, management points to its track record, including hitting positive cash profits for each of its pubs within four months. The key for investors will be the subsequent growth given most people are likely to check out their 'new' pub in its early days. An estimate by Savills though shows the value of the estate is now £36.8m - an uplift of £10.3m after acquisition costs, fees and renovations, according to Upham.

The business snaps pubs up from large groups including Punch Taverns (PUB) and Enterprise Inns (ETI) - both of which have been disposing of sites in recent years - as well as buying some private owners out of their businesses.

It says that from 2013 to 2015, its revenues grew from £4.6m to £12.2m, with cash profits swinging to £900,00 from a loss of £200,000.

Chris Phillips, chief executive, said he had identified a "wealth of opportunities" around his company's existing sites which would provide the planned growth and allow it to add to its "loyal customer base".

Time will tell if it also has a loyal investor base too.