Revolution marches on - Inventive's £6m expansion fund
Inventive Leisure has raised £6m to finance further expansion of its vodka bars.
Students and young professionals from Aberdeen down to Soho are not the only ones with an unquenchable thirst for vodka-fuelled style bars.
The City, it would seem, cannot get enough of Revolution and its publicly-quoted parent company, Inventive Leisure.
The Manchester-based business floated on AIM two years ago with a market value of £20m. That has since risen to £40m and last month it returned to financial institutions to raise £6m in additional share placing, taking the market cap to £46m.
Analysts say there are three reasons for the City's apparent affection. Inventive has a differentiated product in vodka, it is a high cash-return business, and is well positioned for expansion.
The company has also continued to deliver ahead of expectations thus far in public life.
Sales of vodka in Britain have grown by 40 per cent in the last four years and it is the most popular spirit in the world. Vodka generates higher margins than beer, and, because 35 per cent of Revolution's sales come from the white spirit, this essentially means bigger profits.
Testament to the City's penchant for the business is the fact that Inventive's rating is at a 25 per cent premium to Luminar, the highly regarded late-night operator. In fact, Inventive's rating, largely due to its strong growth, is one of the highest in the sector.
The recent re-financing saw the company actually raise £10m - the principle shareholders, founders Roy Ellis and Neil Macleod, plus two family friends, top-sliced their holdings to realise some £4m for their respective pension funds. "We don't want to die having created a fantastic company but with nothing to show for it," said Mr Ellis, chief executive. "For the last 10 years we have plunged every last penny into the business. We don't pay ourselves an enormous amount so it was nice to take something for a rainy day."
The £6m raised through the placing will be used to finance the roll-out of the 26-strong Revolution brand. Four openings, including the company's second bar in London, are scheduled for next month.
Mr Ellis added: "We are very pleased with the success of the fund-raising, which was oversubscribed. The addition of new funds will allow the company to significantly accelerate the roll-out of the Revolution brand."
Last week the company reported half-year profits up 42 per cent to £1.32m on sales up 44 per cent to £12.4m. Like-for-like sales rose 1.2 per cent.
The company said it has identified an additional 100 locations for Revolution. It had seen encouraging results from Doncaster, the first non-university town to have the vodka-led brand.
Mr Ellis also said that recent forays on to the high street, most notably in Broad Street in Birmingham had been successful and showed that Revolution could take other brands head-on. The Birmingham Revolution, the largest to date, has weekly sales approaching £50,000.
The £6m placing means that there is now more free-equity in the market, essential to the company's plans to transfer over to the main London Stock Exchange.
So the Revolution, and the award-winning Inventive Leisure, march onward.
The story so far
1991: Inventive Leisure opens its first bar, Moonshines, in Ashton-under-Lyne, Greater Manchester1995: Voted best Multiple Retailer in The Publican Awards having grown the group to eight unbranded outlets1996: The first Revolution is opened in Oxford Street, Manchester. Four more Revolution bars follow the same year 1999: Wins Multiple Operator of the Year in The Publican Awards for the second time on the strength of the Revolution brand2000: Inventive lists on AIM with a value of £20m2001: The group hits the capital with its first London Revolution in St Annes Court, Soho. The Revolution count is 252002: Voted Pub Company of the Year at The Publican Awards. Market value hits £46m following £6m placing
Read more on this year's Publican Awards
