Goldman Sachs advice on pubs sale

Australian pubs are up for sale and Goldman Sachs is cleaning up.

Over the next few months, about $750 million worth of Australian pubs will be on the market.

We can expect all sorts of activity ahead.

The market has been buzzing with talk that adman John Singleton and former investment banker Mark Carnegie are looking to sell the Australian Pub Fund.

And meanwhile Goldman Sachs is being tipped to advise about the Redcape Hotel Group sale, edging out Citi.

The Australian Pub Fund is backed by Carnegie and Singleton and it's reported to have eight pubs in its stable. Analysts say it could be worth anywhere between $100 million and $200 million.

Talk about the fund going on the market has been around for some time.

Last year, Evans and Partners was taking soundings about a potential initial public offering although the response was lukewarm.

There have been other attempts by Redcape and  Australian Pub Fund to float.

Back in 2014, Citi was working on a plan to float the Australian Pub Fund complete with pubs, along with properties like hotels, marinas, car parks and self storage facilities. The package was estimated to be worth anywhere between $250 million and $500 million.

The Redcape trade sale meanwhile is expecting to fetch a price of $600 million.

Redcape, which has York Capital among its owners was getting advice from UBS and JP Morgan about a potential float. Mole has expressed interest in acquiring the business.

The links between Redcape chairman Trevor O'Hoy and Goldman Sachs go back a long way to the days when O'Hoy was chief executive officer at Foster's. At the time he was using Goldman Sachs as his adviser.

The question right now is whether the strong anti gambling stance of senators Andrew Wilkie and Nick Xenophon will reduce the amount pub owners can expect from a sale. With both politicians wanting to introduce a $1 maximum bet on all pokies, it would make pubs less attractive as a business.

On the other hand, there are expected to be concessions around sports betting. And politicians will be reluctant to interfere with gambling at state levels. The states earn lots of money from gambling and Canberra will be reluctant to pick a fight with the states.

by Leon Gettler, July 29^th 2016