Aug 27, 2013

Red Hot deal for Risk Capital Partners

Private equity investor Risk Capital Partners (“Risk Capital”) has completed its acquisition of a majority holding in Red Hot World Buffet to provide development capital for the restaurant group’s further expansion.

Red Hot World Buffet was founded in 2004 by husband and wife, Parmjit and Helen Dhaliwal. It now has seven large restaurants across the UK, employing 600 people with a turnover of £22m. The transaction value is not disclosed.

The leading buffet restaurant group, which serves English, Indian, Chinese, Italian, Tex-Mex and Japanese dishes, amongst others, has grown from one small site to having seven restaurants in Northampton, Milton Keynes, Liverpool, Leeds, Manchester and Cardiff, plus the new 20,000 sq foot restaurant in Nottingham that re-launched earlier this year.

Risk Capital’s investment provides development capital to upgrade the existing estate, as well as growth funding for the Group’s eighth site which is due to open in Leicester in 2014.

The business plan backed by Risk Capital will see the current management team remain, augmented by James Horler, initially in a part time capacity. James has previously grown restaurant businesses such as Frankie & Benny’s and La Tasca as Chief Executive. Risk Capital’s Luke Johnson is the newly appointed Chairman of the Group.

Pammie Dhaliwal, Founder and CEO of Red Hot World Buffet, commented: “This is an exciting time for us and all the staff who have been involved in making Red Hot World Buffet a success since we launched our first restaurant in 2004.

“Risk Capital’s investment solidifies our growth ambitions and provides the financial and strategic support to help us capitalise our market offering.  We are looking forward to what the future holds.”

Luke Johnson said: “We have been talking to Pammie and Helen for over three years and are delighted to have made this investment. We believe the buffet dining space to be one of the fastest growing segments of the UK’s restaurant market and that Red Hot offers great choice and great value for money to its customers in these challenging times.  We are looking forward to working with the Founders and the wider management team to help them in their ambitious growth plans.”

BDO LLP, the accountancy and business advisory firm, were lead advisers to Red Hot World Buffet. The team was led by M&A Partner Peter Hemington and Assistant Director Kieran Lawton, supported by James Gregson and Nicola Gibbs.

Peter Hemington, M&A Partner at BDO LLP, said: “This deals highlights that M&A and investor appetite remains strong for innovative concepts in the restaurants and bars sector.

“Pammie and Helen have continued to innovate and develop their offering across seven UK cities, creating hundreds of jobs in the process. Risk Capital’s investment and sector expertise will support the Group’s plans, in a deal that provides an exciting opportunity for both parties.”

Risk Capital was advised by Baker Tilly, CMS Cameron McKenna, Jelf Manson and Catalysis. Pinsent Masons acted as lawyers for the Company and the Founders, and JMW acted for the management team.