Savor Group acquires Hipgroup, announces $6 million equity raise

Inside Amano restaurant in Auckland's Britomart. Photo / Fiona Goodall

NZX-listed hospitality group Savor has acquired Amano owner Hipgroup and its portfolio of eateries for $11 million.

Savor made the announcement to the NZX this morning, saying it would raise new equity capital of $6 million to fund part of the transaction. The equity capital will come by way of a fully underwritten rights issue targeted at raising $6m at 17.67 cents per share.

The acquisition of Hipgroup and its venues Ortolana, The Store and Amano, comes in the form of a cash payment of $7.15m, $1m of ordinary shares, and a deferred cash payment of $2.85m to be paid 12 months from completion.

Savor said the acquired venues would contribute to an additional $3m in operating earnings for the group.

The transaction will be funded through additional debt financing and "new equity capital of $6 million already fully underwritten" to support growth and strengthen the balance sheet.

Once completed, the group is expected to have about $7m in cash reserves to support growth and a total debt-to-equity ratio of around two times operating earnings.

In the market update, Savor said the acquisition of these venues, combined with the recent divestment of Moa Brewing, provides the group with "a solid financial base for future growth".

"Looking ahead, Savor's growth strategy is two-fold and will focus on opportunities to build on existing brands throughout New Zealand, as well as acquiring new sites," said Savor chairman Geoff Ross. "The group is poised to leverage the right opportunities with the support of its expert management team and strengthened balance sheet."

Hipgroup managing director Jackie Grant said the development and success of the three hospitality venues was a significant achievement.

"While the decision to sell was not taken lightly, I am delighted that these venues will go forward under the careful ownership of Savor. I have no doubt that Savor will continue the growth and creativity, but most importantly, look after our amazing and dedicated teams, leaders, and customers," Grant said.

The acquisition of Hipgroup is dependent on debt funding arrangements and is expected to settle on April 8.