Texas Pacific deal punches hole in Goldman

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The Independent Online

The US private equity firm Texas Pacific Group yesterday disposed of its 21.8 per cent stake in the pubs operator Punch Taverns for about £221m, making an estimated profit on its investment of about £160m.

But Goldman Sachs, the US investment bank which handled the sale of Texas Pacific's 54 million shares, is said to have lost an estimated £5m on the deal.

City sources said yesterday that Goldman Sachs took the stock from Texas Pacific in a so-called bought deal at 409p a share - a discount of some five per cent from the previous night's closing price.

They said, however, that the investment bank had struggled to sell the shares on to institutional investors at a higher price and had actually ended up losing money on the deal by getting about £4 a share for the stake.

Shares in Punch Taverns dropped 6.7 per cent, or 28.75p, to close at 401.25p last night after Texas Pacific confirmed it was selling the stock and as investors heard that Goldman Sachs was struggling to offload the shares.

Punch Taverns was set up in 1997 by Hugh Osmond with the purchase of bars sold by Bass and Allied Domecq and was floated on the stock market in May of last year at a price of 230p.

Texas Pacific had helped fund the purchase of the Allied Domecq pubs. Some £60m of its investment is said to have been rewarded with the 54 million shares in Punch.

The private equity house would not comment yesterday on the price it had received for its 21.8 per cent holding or on its specific reasons for selling the shares.

The massive jump in Punch's share price will obviously have been a major factor. The stock hit a closing high of 430p on Tuesday night - a rise of 87 per cent since its flotation 19 months ago.

Another factor behind the decision to sell is likely to have been Texas Pacific's involvement in the buy-out of the high street retailer Debenhams. The private equity firm, run by David Bonderman, got shareholder approval last month to buy the chain along with CVC Capital Partners for £1.7 billion.

City sources also pointed out that an "orderly market" agreement struck with venture capital firms - which meant they could previously only sell the shares through a specific broker - had also expired last month.

The move leaves venture capital firms owning just eight per cent of the company. They had held something like 60 per cent of Punch Taverns when it floated.

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