Barracuda - Snapping them up

Barracuda is continuing to look for potential acquisitions to add to its estate.

When a new company called Olivegrange came on to the scene to buy 35 pubs from Enterprise Inns, the name conjured up images of rural idylls and barns full of fruit.

A few weeks later, it put an end to this by announcing a new identity - Barracuda Group. By adopting the name of a predatory tropical fish, it signalled that it intended to move quickly and snap up any tasty packages on offer.

Chief executive Mark McQuater insists that the name is "meant to be fun", but adds that it "reflects our intention to be predatory in buying properties in the pub business".

The company was formed in July last year to carry out the £50m acquisition of the Enterprise pubs, which were the remaining managed pubs from Swallow, formerly Sunderland brewer Vaux.

Within two months, Barracuda had got its teeth into a second package - the 63-strong Ambishus Pub Company, which had been around for only two years.

Since then, Barracuda has been working on its existing estate, which is now made up of 80 managed houses.

But for some months, it has been named along with Regent Inns as one of the front-runners in the bidding for Wolverhampton & Dudley Breweries' 34 Pitcher & Piano bars. Although nobody was commenting as this article was posted on thePublican.com, it clearly demonstrates that Barracuda is seen as a prominent and acquisitive pub company.

"We are getting shown all packages that come up," Mark admitted. "We are active and are bidding for packages all over the UK, but we are not interested in paying too much."

Pitcher & Piano was originally tipped as fetching as much as £75m, but more pessimistic analysts now suggest it could be snapped up for as little as £60m.

Barracuda has the advantage of being backed by a major private equity firm, PPM Ventures, which is part of finance giant Prudential. PPM knows the pub industry well after investing in other businesses, including providing support for the £171m management buy-out of Pubmaster five years ago.

Debt funding is supplied by the Royal Bank of Scotland, which has helped many pub companies over the years and, through its property arm, owns over 1,000 pubs of its own.

"We have plenty of firepower without needing to raise any money," Mark said.

As a private company, Barracuda can also move more quickly without being tied to stock exchange rules or having to deal with a diverse assortment of shareholders.

This makes a pleasant change for Mark, whose background has largely been within quoted companies.Before spending five years looking after corporate deals in the equity division of NatWest bank, he was managing director of JD Wetherspoon during a period that saw its estate grow from 55 to 165.

After NatWest, he joined the Rank Group to head its pub division, Tom Cobleigh, early in 1998 but left after less than a year to join another listed group, Greenalls.

He was managing director of Greenalls Pubs & Restaurants for just 11 months until November 1999 when the whole estate was bought by Scottish & Newcastle Retail.

Mark built up a strong management team at Greenalls, made up of people he had worked with before. Not surprisingly, many of them followed him to Barracuda - operations director Kieran Phelan, human resources director Jane Biss and property director Steven Price.

Other members of the team include Tim Fearn, who has joined from Ambishus as finance director, and Ann Mills, who has joined from Punch Retail as commercial manager.

As Barracuda repositions and revamps many of its pubs, it has also brought in a number of new area managers and pub managers.

"We now have a family of quality people," Mark said. "We attract people who want to get away from the big corporate culture of a plc, who like to see who is running the business. They can get instant decisions, and more certainty."

In its first year, Barracuda has invested £2.9m in 33 projects, with an average spend of about £52,000 per pub.

"Larger companies have been very poor investors of money," Mark said. "We invest money well and look after the estate."

He said Barracuda was determined to spend wisely, which meant it would not fall into the trap of paying too much for rents. While all its pubs in the North are freehold, about two-thirds of sites in the South are on long leases.

"Rent deals and fit-out costs have been too high in the industry," Mark said.

Barracuda has also been investing in its systems, spending £8,000 across the estate installing EPoS from Zonal Retail Data Systems.

"We are running this as a retail business and we can now look at the profit and loss of every single pub every Monday," Mark said.

With a mix of pubs from Swallow and Ambishus, the management team has been steadily going through the estate to make sure each site is running to its full potential.

"We worked out clearly what the plan was for each site," Mark said. "We are unlocking value where other people can't perceive it.

"We believe in growing by buying smaller companies, integrating them, sorting them out and then moving on."Barracuda has now disposed of 16 of the Ambishus pubs, such as Harvey's - formerly Harvey Floorbanger's - in Battersea, South London, which has become the latest outlet for The Front Room bar group.

With nearly a year passed since Barracuda agreed the acquisition of Ambishus, it cannot be long until it completes another deal.

Mark believes the business can easily grow from 80 to 200, although the long-term target is to grow much bigger.

"You get the best performance out of your pubs and your people if your estate is less than 500," he said. "You get significant complications if you get into the realms of thousands of pubs."

Barracuda Group Ltd​