Dunedin calls time on Celtic Inns

The sale of the Wales and Southern England focused pubs operator, originally acquired by Sand Aire Private Equity, generated a 2.5x money multiple and an IRR of 101%.

Dunedin Capital Partners has sold its investment in UK pubs operator Celtic Inns to The Wolverhampton & Dudley Breweries for £43.6 million (€63 million; $77 million).
Dunedin has generated proceeds of £8.7 million from the transaction, which generated a 2.5 times money multiple and an IRR of 101 percent on the original investment.

Derry: 2.5x money multiple and 101% IRR on Celtic Inns

Sand Aire Private Equity, which was acquired by Dunedin in October 2005, originally backed the secondary management buyout of Celtic Inns in October 2004 from Royal Bank Development Capital when it provided £3.5 million in a £26 million funding package alongside the Royal Bank of Scotland. Gambit Corporate Finance advised management in the original deal and all parties in the current transaction.
Giles Derry, investment director, who led the transaction for Dunedin, said the original investment had been made from the Equity Harvest fund, a £56 million vehicle that Sand Aire Private Equity closed in 2004. The fund is now almost fully invested and comprises seven remaining portfolio companies.
Established in 2002 by managing directors Duncan Murray and Clive Williams, Celtic Inns operates a portfolio of 70 predominantly tenanted local pubs in South Wales and Southern England.
Under Sand Aire Private Equity and Dunedin’s ownership, Celtic Inns expanded its estate from 47 pubs to 70. “The price of freehold pubs has been rising very quickly of late and as a result of the geographically focused nature of our estate, with strong concentration on Wales and Southern England, the collection of freehold pubs proved very attractive, with a number of trade buyers showing interest. Hence the quick sale,” said Derry.
Dunedin increased its assets under management to £300 million upon the acquisition of Sand Aire Private Equity last October. Derry, John Hudson, Andrew Pickup and Estelle Clark joined Dunedin as part of the transaction, while founder and managing director David Williams left to join mid-market buyout firm Graphite Capital.
Edinburgh and London-based Dunedin focuses on mid-market buyouts with transaction sizes between £10 million and £50 million, typically investing £3 million to £20 million of equity in UK MBOs and MBIs. The firm focuses on the construction and building materials, consumer products and services, financial services, healthcare, leisure, media, specialist manufacturing and support services sectors.