Burning ambition from Ambishus Pub Company

Ambishus has set the pub industry alight since it burst on to the scene. We report.

With a background in the Magic Pub Company, it's no surprise that Ambishus Pub Company has been grabbing attention in the eight months since it was formed.

While still in its infancy, it burst on to the Stock Exchange, successfully floating on the Alternative Investment Market (AIM).

Within months it was offering more shares to raise cash to part-fund the acquisition of a package from superpub operator JD Wetherspoon.

It has now embarked on developing its first retail brand, planning to roll it out if it continues to be a success.

Originally, the company claimed that all of its pubs would boast "individuality rather than being heavily branded".

However, the Warehouse café-bar which opened in a newly developed site in Loughborough in Leicestershire last month, has led, typically, to more ambitious plans.

If the concept's popularity continues, the company intends to roll it out at one or two new sites a year across the South East.

Managing director Colin Stevens said: "We have no sites in mind for the Warehouse in our current portfolio so it would be something to look for in the future."

Stevens and finance director Tim Fearn both formerly ran Magic Pub's managed estate before its acquisition by Greene King.

Fearn had been financial controller at Greene King and accounting services director of Magic Pub as well as chief accountant of Countryside Inns and Hotels.

And it was at Greene King that Stevens got a taste of the growing trend towards retail brands, becoming involved in the development of chains such as Hungry Horse, Pickled Newt and Ale Café.

He said the new concept was aimed at women and younger people as well as traditional groups of pubgoers, mixing a continental café style with an industrial warehouse interior.

"It's a vibrant café-bar operation but we wanted to make sure it was a chameleon that would have something for everyone," he said.

It was designed by Mike Webb of pub design specialist Morton and Webb, which has created many national retail brands.

Stevens and Fearn founded the Northampton-based company, originally called Sirenia, last November, acquiring 15 pubs from Grosvenor Inns and 16 pubs - plus five development sites - from Regent Inns for a total of £15.92m.

They intended to focus on town and city centre managed houses, with a rolling programme of refurbishments and more emphasis on food sales.

Their pedigree was strengthened by the support of non-executive chairman Philip Snook, who was Magic Pub's managing director.

Rechristening itself Ambishus, the company continued to impress the City when it launched on AIM in May this year, seeing its shares more than triple on the first day to £3.25.

"Floating on the AIM market gave us the profile we needed to get the right people to join us for the future so that we can live up to our ambitious plans," Stevens said.

The young company certainly had a strong team of well-established names as supporters, who contributed towards a healthy equity base of £4.6m, backed up by £10.8m of bank debt.

These investors include Michael Cannon, who sold Magic Pub to Greene King for £200m in 1996, as well as David Bruce, who started the Firkin chain, and Luke Johnson, the former chairman of PizzaExpress.

Growth continued with the acquisition this summer of 10 managed houses - two freehold, eight leasehold - in and around London from Wetherspoon.

But with the estate now expanded to 40 managed houses and two tenancies, Snook said this was just the beginning.

"The acquisitions of these 10 pubs will complete the first development phase of Ambishus and the enlarged company will provide a sound basis for careful and selective acquisition, including larger portfolios in the future," he explained.

At the same time it raised £700,000 in cash by selling one of the original development sites in Barnstaple, Devon to Wetherspoon.

Its first pre-tax profits were in line with expectations, making £136,181 for the 19 weeks to April on sales of £3.67m.

However, Ambishus suffered a minor setback in June with its £3m rights issue to part-fund the Wetherspoon acquisition.

It coincided with Regent Inns' profits warning, which sent shockwaves through the UK's listed pub companies and brewers, including another rights issue by the Old English Pub Company.

Only a quarter of the 1.5 million Ambishus shares were taken up, leading to the underwriters stepping in to cover the rest of the stock.

But the company is still on target to become a major operator of pubs across the South, from café-bars and bistros to brewhouses and traditional locals.

The rights issue means that the company can buy another 20 sites without having to come back to the market.

Its initial target is 60, but in the longer term it intends to reach 200.

Work is about to start on its other three development sites, including a post office in Royston, Hertfordshire.

And, with further acquisitions large and small expected by next summer, there are no signs that its ambitions will not meet expectations.