Barracuda eyes float - but first comes a £20m round of acquisitions

Barracuda, the 150-strong pubs group that owns the Smith & Jones brand and is run by the former Greenalls boss Mark McQuater, is set for a three-fold expansion ahead of an eventual stock market flotation.

The company, backed by PPM Ventures, the Prudential's private equity arm, has a £20m war chest to spend on acquisitions over the next 12 months. It is keeping a close eye on "several" opportunities in the crisis-struck sector, which has struggled to cope with intense competition on Britain's high streets.

Barracuda, which tabled an offer for part of Scottish & Newcastle's retail estate, said yesterday its strategy of focusing on less crowded secondary towns had helped it to buck the recent downturn, revealing that like-for-like sales had grown by 3 per cent since its new financial year began in October.

The company, which was formed in July 2000, said it had recently raised a further £7.5m from its banking syndicate, increasing the total funds available to more than £20m. Five of the 25 new units it plans to open this year are already trading, including a new student-focused Varsity chain. Mr McQuater said that students were still drinking as much as ever - in contrast to other student-orientated operators such as Inventive Leisure and Luminar, which have blamed cash-strapped undergraduates for recent profit warnings.

"They are wrongly accusing students," he said, adding that sales at the group's Varsity units rose by 5 per cent during this year's freshers' week in October, compared with the previous year.

He said the group hoped to trade from up to 500 sites over the next two to three years, adding that he sees scope for its main Smith and Jones brand - an "upmarket pub designed as an antidote to minimalist bars" - to be expanded into a further 300 towns. It currently trades from 60 sites.

Mr McQuater said a stock market listing was "something that we will think about over the next year or two", adding that there was "no pressure" from PPM Ventures to find an exit. "If the stock markets pick up, then who knows?" he added.

The company said its earnings before interest, tax, depreciation and amortisation rose by 20 per cent to £17.2m in the year to 30 September, while like-for-like profits grew by 8 per cent. Underlying sales from uninvested units rose by 3.6 per cent during the period, which saw a number of established operators, such as Po Na Na, collapse into administration.

Despite increased regulatory issues, such as the rise in minimum wage, Barracuda said its operating margins before rent and central costs held firm at 33.5 per cent.