The private members’ club Soho House is reportedly close to reaching a $1.8bn (£1.3bn) deal to take it private after a tricky four years listed on the New York stock exchange.
New York-based MCR Hotels is poised to lead new equity investors in the chain of clubs as part of a deal that would involve it ditching its stock market listing, the Wall Street Journal first reported.
Soho House was founded in 1995 with a single club in the central London area from which it takes its name. It was founded by the restaurateur Nick Jones, who has a 5% stake, although the biggest investor is the US retail billionaire Ron Burkle, who holds 40% of the company. Richard Caring, the owner of the Ivy restaurant chain, has a 21% stake.
The new investors are expected to pay about $9 a share for about 15% of the Soho House & Co shares that trade publicly. That would value the company at about $1.8bn – well below the $2.8bn valuation it achieved soon after listing in 2021.
MCR Hotels is the third-largest hotel operator in the US, with more than 150 sites including the High Line hotel and the TWA at JFK airport, both in New York. It is converting the BT Tower in London’s Fitzrovia into a hotel, after reaching a deal to buy it for £275m last year.
Soho House operates 10 locations in London, and 48 that are either open or planned around the world, ranging from Paris and Istanbul to Bangkok and Mumbai. It has four clubs in Los Angeles and three in New York.
It attracts celebrity clientele, with Kate Moss, Kendall Jenner and Ellie Goulding among those spotted at its clubs. The Duke and Duchess of Sussex, Harry and Meghan, met on a blind date in 2016 at its 76 Dean Street house in London.
However, the company has had to balance the rapid and expensive global expansion of the chain with the difficulty of retaining the feeling of exclusivity demanded by the 270,000 members who must pay an annual fee of up to £2,920 a year for access to every property.
Its share price has dropped from above $14 in August 2021 to $7.64 on Friday. The company has lost a cumulative $739m in the four years it has been listed, although it has made a net profit in its past three quarters.
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Its struggles have attracted attention from activist investors who push for improvements in companies. Third Point, the hedge fund run by the billionaire Dan Loeb, had argued that Soho House should seek other investors to try to push for a competitive bidding process.
The Wall Street short sellers GlassHouse had previously raised concerns about Soho House’s accounting, although these were rejected by the company.
Soho House was approached for comment.
