Cognetas writes down Novus Leisure investment by £60m

The private equity group which owns Tiger Tiger operator Novus Leisure has revalued its investment in the company from the equivalent of nearly £80m to a little over £20m.

thepublican.com ​has seen documents that reveal Cognetas had invested approximately €118m (£79.9m) in Novus, but that at the end of June this year managers at the private equity firm had valued that investment at €30m (£20.2m).

Consequently, Cognetas said it would be making a valuation provision of €87.5m (approximately £60m).

The firm, formerly known as Electra Partners, took Novus Leisure - then known as Urbium - private two years ago, after a bidding war with rival bar operator Regent Inns.

A spokesman for Cognetas acknowledged the revaluation had taken place, but refused to comment specifically on what had caused it.

"These things happen," he said. "The first 14 months after Cognetas bought Novus were tough, what with the new Licensing Act and the effect on trade of the July 2005 bombings in London," he said.

"But strategies have been put in place to address the challenges and Novus is now trading well. You expect some lows at first, followed by highs."

The spokesman added that Cognetas was fully supportive of the management team at Novus, which includes chief executive Steve Richards and chairman John Barnes, which was doing "a great job".

"The revaluation does not affect the trading situation of Novus at all," he said.

Cognetas recently agreed £20m-worth of new financing for Novus with its leading bank lenders, Royal Bank of Scotland and Barclays, £5m of which was being injected into the business almost immediately in order to acquire new sites.

One industry expert, who asked not to be named, said that while Novus may have indeed turned a corner, "it clearly hasn't gone according to plan [for Cognetas].

"The fact they are putting in new money suggests they believe the team can trade the current situation out, but they won't get the returns from the business they had anticipated when they bought it," he added.