Duxton Pubs prioritises venue upgrades ahead of potential IPO

IPO hopeful Duxton Pubs is prioritising a multimillion dollar spend on its existing portfolio ahead of more acquisitions — and a potential ASX listing.

Duxton Pubs chief executive Mark Condi. Picture: Supplied

IPO hopeful Duxton Pubs is prioritising a multimillion dollar spend on its existing portfolio of hospitality venues ahead of more acquisitions and a potential ASX listing.

The unlisted fund run by Adelaide businessman Ed Peter — the former head of Deutsche Asset Management in Asia Pacific — will add a 27th venue to its stable in January with the acquisition of the Birkenhead Tavern near Port Adelaide, before a $35m capital raise which has been pushed into the first quarter of the new year.

The funds will be used to upgrade several properties, while the company is also running the rule over a number of potential acquisitions.

Former Bankstown Sports Club chief executive Mark Condi, who joined the company as chief executive at the beginning of 2024 after a year-long stint with Justin Hemmes’ Merivale, said there was an opportunity to improve the performance of several of the group’s assets.

“When I arrived, we went from The Lion Hotel (first acquisition) in 2020, to 26 venues in four years — and Covid is amongst that,” he said.

“What that’s meant is that while we’ve grown really quickly, when you look under the hood, there’s a lot of opportunity here to clean up the systems and still retain that uniqueness of each of those venues, which is critical.

“My focus, and certainly the focus on the team, is I just see huge opportunity in our existing portfolio. I think there’s better value by spending a dollar on some of those venues in the portfolio than potentially acquiring. That’s not to say that we won’t acquire — absolutely, I’m sure we would look at it, but there’s a huge opportunity in the current portfolio.”

Duxton Pubs was established by Mr Peter and Adelaide hospitality identities Brett Matthews and Martin Palmer in 2020 with the acquisition of The Lion Hotel in North Adelaide. It has since raised about $70m in capital, which has been used to acquire venues across metropolitan Adelaide and regional South Australia.

Ed Peter, part owner of the Duxton Hotel Group, at the bar of the Cremorne Hotel in Unley. Picture: Matt Turner

Upgrades, refurbishments and redevelopments are currently being planned for venues including The Lion, the Cremorne Hotel and the Swanport Hotel in Murray Bridge.

According to the company’s latest financial statements filed with ASIC, the company’s trading earnings (EBITDA) increased to $6.3m in the year to June, up from $5.4m, but impairments and depreciation resulted in a net loss of $4.4m, compared to a $5.7m loss in the previous year. Annual revenue increased by 27 per cent to $116.6m.

The Lion Hotel in North Adelaide. Picture: Facebook

Mr Condi said while cost of living pressures were affecting discretionary spending across the portfolio, like-for-like revenue was up 5.5 per cent so far this calendar year, and he was hopeful of a turnaround in economic conditions in 2025.

“Pubs are a little bit recession proof — in times of crisis or cost of living pressures, people are generally still going to want to go out, but they may just reduce where they go,” he said.

“But the challenges have been a little bit different this time around. That disposable income is significantly reduced, but then on the opposite side our costs have increased so much — you don’t normally get both.

“If we can improve our margins, which they have improved, I don’t really want to be putting prices up, because that can hopefully then leverage the point of difference to everyone else.”

A public float of the pubs fund has been a long-held ambition for Mr Peter, who runs two other listed vehicles — Duxton Farms and Duxton Water.

The Duxton Pubs portfolio of assets is currently worth more than $230m, and Mr Peter said the aim was to grow it to more than $500m at the time of an ASX listing, which was being planned in the next two years.

“We’ve had a JV structure and the goal is to move from the JV structure to a more normal corporate structure — we’re going to be working on that in the next couple of months, and then we will go back to the market and raise more capital,” he said.

“We will look to buy new assets. There’s two things we’d like to buy that we’ve identified. And then there’s seven other venues that we’re doing one stage or another of DD (due diligence) on — and of those seven my guess is two to three would probably fall into the portfolio.”

While Duxton is not currently looking to acquire venues outside of South Australia, an public listing would broaden its investor base and provide the capital for a national expansion.

Originally published as Duxton Pubs prioritises venue upgrades ahead of potential IPO