Nomura looks at pub flotation

NOMURA INTERNATIONAL is looking to refinance its 4,000 Inntrepreneur pubs as a prelude to a stock market flotation of the business. The most likely route is through a securitisation of the pubs' debts, a move it previously said might not be appropriate.

The plans are at an early stage as Nomura is still conducting its due diligence on the pubs, which it acquired for pounds 1.2bn from Grand Metropolitan and Foster Brewing last year. It has a team of staff examining cash flows and rentals to assess the best course.

A stock market flotation is understood to be on the agenda, although Nomura said it had not yet appointed advisers. A listing would provide the City with an opportunity to evaluate the stock market potential of a business whose cash flow had already been sold off. About 70 per cent of the pubs' income comes from long leases, making it an ideal candidate for securitisation. Though Nomura has sold on some of its securitisation deals before, such as Angel Trains to Royal Bank of Scotland, it has yet to take one to the stock market.

Nomura has pulled off a string of audacious deals in the last three years with its innovative securitisation technique, which involves parcelling up the target's debt and selling it on in the form of bonds. In April, Nomura surprised the City when it chose to raise pounds 700m in debt to finance the Inntrepreneur and Spring Inns deals rather than choosing the securitisation route.

Nomura's pub interests are now grouped under the Grand Pub Company name. It has split the 4,000 Inntrepreneur pubs into two divisions: 2,600 into as yet unnamed company led by 31-year-old Giles Thornley and 1,400 still trading as Inntrepreneur. It also has 275 under the Spring Inns division. Mr Thornley is a key figure in Nomura's principal finance group, which is led by Guy Hands. Mr Hands has masterminded the bank's pounds 8bn flurry of deals.

Nomura split the Inntrepreneur business to limit the effects of continuing legal action by a group of dis-gruntled licensees. The outstanding legal issues were seen as a stumbling block to Nomura selling down the division's debt.

Separately, Nomura is still seeking deals in Germany after losing out on its bid for 120,000 railwaymen's homes. It is keen on property deals in Germany, where 60 per cent of housing is municipally owned.

Nomura has not yet decided whether it will securitise the debt on Thorn, the television rentals business it acquired for pounds 980m in July al though the stable revenue stream from rental contracts would be suitable security. Its other deals have included William Hill bookmakers for pounds 700m and a Ministry of Defence homes deal worth pounds 1.7bn.

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