- Nightcap says its value is not reflected in its share price as it prepares for AIM exit
Hotel group Nightcap is to become a private company and the firm is preparing to delist from London’s AIM market.
Nightcap, founded by former Dragons’ Den star Sarah Willingham, told shareholders on Friday that its true value was not reflected in its share price, although it was once again forced to cut trading performance expectations for the year.
This potentially marks the latest departure from London markets driven by concerns over valuation, liquidity and cost, which have also led to more companies staying private for longer than they would have previously been able to do.
Sarah Willingham, Founder and CEO of Nightcap
Cup actions fell more than 50 per cent to 1.6p in early trading on Friday, having fallen 87.2 per cent from its January 2021 listing price of 13.5p and 94.9 per cent from a high April 2021 34.5p.
The group, which was forced to abandon a takeover bid for troubled rival Revolution Bars earlier this year, has endured tough trading of late, with Nightcap cutting performance expectations in March.
It blamed rail strikes, rising business rates and pressures on consumer costs of living after pre-tax losses doubled year-on-year to £1.8m in the six months to December 2023.
And now Nightcap says adjusted earnings before the unpleasantries will likely fall short of expectations amid a “challenging” 2024 for the hotel sector.
It said: ‘The main headwinds come from the continuing cost of living crisis, above-inflation increases in business rates and other costs, as well as the impact of the national minimum wage rise and rail strikes in course’.
The owner and operator of 46 premium bars said it had also assessed “the value attributed to its current market capitalisation”, the liquidity of its shares and Nightcap’s “ability to raise further capital through the public markets at an acceptable price and the cost of maintaining a public listing.”
Nightcap said it had ultimately concluded that a delisting was in the best interest of shareholders, 76.9 percent of whom had already backed the decision.
Chairman Gareth Edwards said: “However, we have not taken this decision lightly, following extensive review and deliberation to determine the most effective way to maximise long-term shareholder value and enhance the Company’s potential for long-term success. The Board has unanimously concluded that it is in the best interests of the Company and our shareholders to cancel our admission to AIM and re-register as a limited company.”
Since its founding at the height of the Covid-19 pandemic, Nightcap has grown through acquisitions and capitalising on the depressed commercial property market to open bars on more commercially favourable terms.
His acquisitions also include the Latin American-inspired Barrio Familia and Adventure Bar Group.
The attempted takeover of Revolution Bars followed the acquisition of cocktail bar chain Dirty Martini and the acquisition of bar operator The Piano Works.
In the medium term, founder Willingham has said she wants to double the size of Nightcap’s estate to more than 100 venues.
On July 17, investors will have the opportunity to officially vote on the delisting proposal, which will take effect at 7 a.m. on July 29.
Edwards added: “The Board believes that Nightcap’s current public market valuation does not reflect the underlying potential of our business or our achievements to date and that this is unlikely to change in the short to medium term. Since our last institutional fundraise in May 2021, we have demonstrated multiple times that we are able to access funding from non-institutional sources at a premium to our share price at that time.
‘We believe that we will be able to continue to execute our strategy as a private company and therefore believe that canceling the company’s admission to AIM is in the best interests of shareholders and the future of our business as a whole. ‘
