The Publican's Morning Advertiser's sister title M&C Report understands the listing of the Enterprise Investment Scheme (EIS)-backed freehold pub operator would value the nine-strong chain at c£13m.
20 to 40 pubs across southern England. So far, the acquisitions have all been of individual pubs, but management led by James Birch will also consider the purchase of groups of pubs.
The business was founded in 2007 as a vehicle to acquire high-quality, community (typically rural), food-led pubs in southern England. The estate currently comprises 11 pubs, after the operator acquired the Cockhaven Manor in Bishopsteignton, Devon and The Woodborough Inn in Winscombe, Somerset, last week from separate owners for undisclosed sums.
Heartstone has raised £2m this year via EIS, taking it to its limit for the scheme.
Growth
In the seven years since the business started, revenue has grown to £6.5m and pub EBITDA to £0.9m. Revenue is projected to grow to just under £11m in 2017, with EBITDA at £1.55m.
The strategic intention is to exit via a trade sale in due course.
Broker Finncap has modelled three financing scenarios for the business: (1) a steady state case that assumes a £1m equity raise and no further pub purchases apart from the two already identified; (2) a base case that assumes a £3m equity raise and three new pubs purchased; and (3) a higher growth case that is based on a £10m investment (including a £7m equity raise), which would see the estate go from the current nine pubs to 22 over the next four years and would see pub EBITDA move from £0.9m to £2.4m.
In July, Birch told M&C Report he was considering several different avenues for the company adding: “We will continue to expand and push the group forward”.