The reopening of the famous Lion Hotel this week heralds the launch of a new multi-million-dollar pub investment fund with high ambitions to be one of the biggest in the country.
Duxton Asset Management (DAM) is founded by Ed Peter, Martin Palmer and Brett Matthews, who already own 19 pubs between them.
They teamed up to buy the Lion, as the cornerstone asset in a pub vehicle set for an initial $40 million, with around $25 million to be raised from sophisticated investors.
DAM has cited plans to buy in the region of 10-15 pubs throughout metropolitan and regional South Australia over the coming year and optimise them through considered, locally-sensitive refurbishments.
North Adelaide’s heritage-listed Lion Hotel has been owned by Tim Gregg and Andrew Svencis since 1996, and the pair accumulated a trove of awards for the venue, incorporating a restaurant, function rooms, brewery and malthouse.
Following the pandemic shutdown, the Lion remained closed for renovations even through the sale process in September, and this week reopens in time for a booked-out Melbourne Cup lunch.
DAM’s founders say they understand the fragmented nature of pub ownership in Australia, and cite synergies they feel they can leverage through a portfolio across purchasing, staff and marketing.
They are understood to be currently doing due diligence on at least half-a-dozen upcoming acquisitions, with interest in both freehold and leasehold assets. The Adelaide Advertiser reports DAM’s longer-term ambition is to be a top three pub owner nationally, while continuing to focus on the South Australian market. There are over 600 venues in the State.
This rapid expansion is toward the greater goal of an IPO “within four years”. Peter has previously founded ASX-listed companies Duxton Broadacre Farms and Duxton Water, but is also the owner of the Crafers and the Uraidla hotels.
He suggests the hotel industry can enjoy “really good dividends” in a range of economic climates and is targeting a seven per cent dividend for this short financial year, with 9-11 per cent expected for a full financial year.
The opportunity is said to be courtesy of a vision the founders have to create a more profitable ecosystem in the State.
