Blackstone pays £267m to buy Café Rouge chain

Tragus, the owner of the Café Rouge and Bella Italia restaurant chains, has been sold to the private equity firm Blackstone for £267m.

The company, which was owned by another private equity firm Legal & General Ventures, had been planning a stock market flotation and analysts say that the deal reflects the growing significance of private equity in the financial markets.

Tragus' chief executive Graham Turner, who owns a significant stake in the company, will remain at the helm along with the rest of the management team.

The company has undergone a remarkable transformation since it was sold for just £25m as a struggling division of leisure group Whitbread five years ago. Under the ownership of the private equity firm ECI, empty sites were sold off, the payroll was outsourced, menus rejigged and profits trebled.

L&G bought the company for £107m in January 2005 and appointed Mr Turner, previously of the Unique Pub Company, as chief executive. Turnover grew from £117m to £130m between 2005 and 2006 while annual profits increased by 32 per cent. This year the company launched a new format, Ortega, a Spanish tapas bar and cantina which operates from three venues.

It is understood the London-based company, which runs 88 Café Rouge sites and 67 Bella Italia outlets, was approached by several other private equity firms after it announced a strategic review in October.

L&G chief executive Adrian Johnson said Tragus would have been an ideal float candidate but added that the "transaction demonstrates the strength of the private equity sector as an asset class".

Mr Turner said he expected the core brands to go from "strength to strength" and was confident about the potential of the new Ortega brand.