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Mon 26th Nov 2012 - Breaking News
Private equity fund eyes nightclub market: A private equity fund is planning to focus on the nightclub market, buying distressed assets around the UK. Cayman Island-registered property fund EMCO Capital Advisers, is to buy regional sites that it will either refurbish and re-open or turn into flats, shops or offices. The launch of the fund underlines the rising propensity of private equity companies to invest in parts of the leisure market where they see high returns on investment, not least because of general under investment and reduced property values. Emyr Hughes, who has co-founded the fund with Danny Brown, told The Financial Times: “Clubbing is about escapism and people are being a lot savvier these days about how they spend their money to escape from normal life. If you want custom you need to provide something people are prepared to pay for, like getting one of The X Factor contestants to come and do a live act.” The fund is regionally focused and will avoid London because of high property vales and a tougher planning regime. The fund will target venues that may have lost their operating licence, need refurbishment or are currently running at a loss. They envisage capital growth will be driven by relicensing of the premises where the licence has been lost, income derived from the granting of leases to Emco Leisure, which will operate the venues, or ‘change of use’ permissions, enabling some venues to be converted into residential property. After a two-year investment period, the properties will then be sold on. Hughes added: “The portfolio of venues, each to be held over a two-year cycle (and we hope and expect to start with at least six) will, operationally, benefit from efficiencies of scale due to a centralised management system being developed by the venue operator. We expect the fund’s investors to enjoy considerable opportunities for returns on the back of risk reduced by portfolio diversification and, moreover, by the presence of planning permission on each property. We see this as, potentially, a useful opportunity to achieve strong returns in a low interest rate environment.” The fund has a minimum investment level of £250,000, a two per cent annual management charge and a 20 per cent performance fee if a return of five per cent a year has been achieved.
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