The bank, which has been weighing up options for the 240-strong managed pub and pub-restaurant operator since before Christmas, is thought to be leaning towards a listing of the business, after receiving a number of approaches from would-be advisors to an IPO, and given the succession of companies heading for the public markets.
M&C understands Deutsche Bank and the Orchid management have in recent weeks seen a number of investment banks, including Canaccord, Investec, Lazard, Nomura, Numis and STJ Advisors. Deutsche could also handle the process itself through its own securities division.
The bank is still assessing options and may pursue talks to sell Orchid to a preferred private bidder, or extend its ownership to 2015 or 2016.
Orchid is believed to be generating a ‘run rate’ (projected company earnings over a period of time) EBITDA (earnings before in-terest, tax, depreciation and amortisation) level north of £30m. Therefore, an IPO could value the business at between £250m and £300m.
Capital investment
Orchid recently announced the extension of its capital investment programme, having already invested the £20m originally earmarked for the reinvigoration of the estate.
The group is spending “several millions” on 13 further pub investments this quarter, with more set to follow during the rest of 2014.
It is thought 50 pubs have so far benefited from the investment programme.
Deutsche Bank has a controlling stake in the business by dint of a debt-for-equity swap that saw the bank take control of Orchid in 2010.
Deutsche appointed Sapient Corporate Finance to advise on options for the business last autumn.
While trade players including Stonegate, Spirit and Greene King are thought to have voiced an interest in the business, it is believed private-equity firms and investment groups have lodged the most competitive bids.