Stonegate considers £1bn sale of 1,000 pubs

Stonegate Group is reportedly accelerating plans to sell more than 1,000 pubs in a process that could raise up to £1bn, as Britain’s biggest pub operator works to reduce debts of more than £3bn, according to the Times. 

Senior executives at the Slug and Lettuce and Be At One owner have held early talks with potential advisers to examine options for about a quarter of its 4,300 pubs. 

The portfolio, known internally as the “platinum” collection, contains 1,034 freehold sites and is regarded as among the company’s strongest assets.

Industry sources told the Times that the pubs could be worth as much as £1bn. Stonegate attempted to sell a similar number of properties in 2023 before securitising them against a £638m loan from private equity firm Apollo, creating a separate entity within the group and easing financial pressure.

The outlet said the group is reviewing its options as a non-call period on Apollo’s loan ends in January. Executives are understood to be considering selling the pubs in large tranches rather than as a single package.

Stonegate, owned by private equity firm TDR Capital, was formed in 2010 after TDR bought 333 pubs from Mitchells and Butlers. 

It expanded through acquisitions and, following a £3bn merger with Ei in 2019, overtook Greene King as the UK’s largest pub landlord. According to the Times, the deal left the business highly leveraged just before the pandemic forced pubs to close.

However, High interest rates have since increased pressure on heavily borrowed companies. Stonegate’s finance costs rose to £455m in the year to 29 September 2024, alongside rising labour costs across the sector. 

Fitch downgraded the group to CCC+ in August, citing cost inflation and repayment risks; the ring-fenced platinum pubs were excluded from the review.

The estate is understood to generate about £90m in earnings before interest, tax, depreciation and amortisation. 

Sources have told the outlet that private equity buyers may consider acquiring the properties in groups given their scale and freehold status.

The Times also reported that Stonegate is also pursuing a transformation plan under its chief executive David McDowall, who joined in 2023. 

The group is converting company-run pubs to tenanted and leased sites to cut costs and lift profitability, a strategy it says is delivering an average £110,000 profit uplift per pub.

Stonegate has been contacted for comment.