Hopes fade that PAG will bring Australian Venue Co to the market

Assortment of hard strong alcoholic drinks and spirits in glasses on bar counter

Hopes that Australian private equity firm PAG brings pub owner Australian Venue Co to the market as the next major float are fading, following the performance or recent initial public offerings and that of rival Endeavour Group.

Endeavour Group owns the category killing liquor business operating under the Dan Murphy’s and BWS brands, along with a portfolio of pubs, for which earnings are aided by slot machines.

It has seen its share price fall 17 per cent in the past year.

Companies that recently listed, while starting trading life well, have come off the boil.

Land lease retirement living operator GemLife is trading below its $4.16 initial public offering price at $4.05 after its market debut last week and airline Virgin Australia is trading at $3.05, not far above its IPO price of $2.90 per share.

The hope was that the success of the deals would pave the way for other IPOs to come to market, but so far, it’s been quiet on that front.

Australian Venue Co was considered an obvious contender, with most of its earnings generated largely from food and beverage and less so from slot machines like rival Endeavour Group.

But there’s been little talk of any plans that it would come to market.

There was chatter around December about listing plans, but some believe that its decision to ban Australia Day celebrations in January would have dampened performance and hurt its chances.

Sources say that the arrival of incoming chief executive Jayne Hrdlicka can’t come fast enough at Endeavour. Picture: Jane Dempster/The Australian.

The group with more than 200 Australian venues was bought by PAG in 2024 for $1.4bn from Kohlberg Kravis Roberts and is considered to be well run with top management.

PAG paid about 10 times earnings when it purchased AVC.

KKR in 2021 tried to list the business through Citi and Goldman Sachs, with former Mantra boss Bob East as chairman, before pulling the deal.

At the time, it was promoted as the nation’s second largest pub chain, with a focus on leasehold venues allowing it to expand in a capital-light fashion.

One of the problems is that although AVC is more appealing from an ethical investing perspective, it’s earnings per pub are said to be far lower than Endeavour’s with one of the latter’s more profitable pubs making more than a handful of AVC’s pubs combined.

Two private equity firms have recently run the ruler over Endeavour for a buyout, including BGH Capital and a global fund.

But both have now walked away and have not shown any signals that they are about to return.

The understanding is that while it may appear to be good value, Endeavour proves problematic for private equity.

Their investors have mandates that excludes certain asset classes that may not be deemed ethical – proceeds from slot machines is one area.

Meanwhile, some sources say that the arrival of incoming chief executive Jayne Hrdlicka can’t come fast enough at Endeavour, with investors hoping the arrival of the former Virgin Australia boss in January next year will help lift the company’s performance.

Chairman Ari Mervis has been running the business in the interim.