Landmark Melbourne pub The Espy bought by KKR-backed Australian Venue Co

Melbourne’s favourite hotel has been bought for $100m by a US-backed private equity giant that has been chasing the prime venue for years.

Private equity giant KKR has finally snared Melbourne’s much-loved Espy Hotel in St Kilda.

The famed US company, which is the backer of local outfit Australian Venue Co that has taken over the iconic venue, has been chasing it since before the pandemic struck.

The KKR-backed company has just finalised a deal to acquire Espy owner the Sand Hill Road pub group for about $100m

The transaction was in train ahead of the first coronavirus outbreak and was set back as the industry was rocked by the crisis.

Australian Venue Co has since been expanding as the industry recovered and last year attempted a float before dumping that plan.

Australian Venue Co has won control of the Espy leasehold as part of an acquisition agreement to purchase eight venues in Melbourne from Sand Hill Road.

The Esplanade Hotel, or The Espy, at St Kilda in Melbourne is one of the city’s most enduring night spots. Picture: Alex Coppel.

As well as The Espy, the venues are the Garden State Hotel, Prahran Hotel, Terminus Hotel in Abbotsford, Richmond Club Hotel, The Posty, Bridge Hotel and Holliava.

Australian Venue Co has focused on acquiring landmark hospitality destinations in Melbourne since the group’s beginnings in 2015 and has steered clear of pokies-heavy pubs.

Australian Venue Co chief executive Paul Waterson said the acquisitions reflected the group’s confidence in Melbourne’s hospitality industry.

“We have enormous respect for these venues and the teams who have made them what they are. We’re excited to welcome the team and to continue operating the venues with the passion, expertise and excellence that the Sand Hill Road team has delivered to date,” he said.

Most of the Sand Hill Road leadership team and venue teams will go across to work with the purchaser.

The hugely popular music show RocKwiz was regularly filmed at The Espy.

Sand Hill Road co-founder Andy Mullins said the company was planning its biggest project to date at The Waterside Hotel in Melbourne, but still treasured its original venues.

Pubs have emerged as one of the main beneficiaries of the reopening of the economy even in the face of new waves of the coronavirus.

The past two years have been marked by elevated trading of landmark hotels in NSW and Queensland, and Victoria is now also opening up.

HTL managing director Andrew Jolliffe says that the industry would perform well and large corporate groups were becoming active after private buyers led the way.

The industry is now focused on the coming sale of The Oaks Hotel in Sydney. The well-known property is expected to sell for about $175m via JLL.