Small Cap Movers: Various Eateries floats to capitalise on hospitality industry crisis

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For Hugh Osmond, the float of his Various Eateries PLC (LON:VARE) chain occurred at possibly the worst moment for the restaurant sector. However, out of adversity tends to come opportunity.

On Friday the owner of the high-end Coppa Club and Tavolino venues raised GBP25mln by placing 34.2mln shares at 73p each, for a market capitalisation of GBP65mln.

Six-year-old Various Eateries, which saw summer trading reach 50%-60% of 2019 levels in London and nearly pre-coronavirus (COVID-19) pandemic figures elsewhere, has said it will use the proceeds to expand its portfolio through opportunistic acquisitions.

“To many, this crisis is an existential threat; but it is also a once-in-a-lifetime opportunity to build a new, major leisure business, based on how people want to live now,” said founder Osmond.

Of course, he has some form after transforming Pizza Express and building Punch Taverns into an 8,000 pub goliath worth GBP3.5bn. He also helped create the FTSE 100-listed insurance aggregator Phoenix Group, and still manages two private equity firms.

For his latest venture, Osmond has teamed up with Andy Bassadone, the force behind Italian restaurants Strada and French bistros chain Cote who most recently led the expansion of Bill’s Restaurants and The Ivy Collection.

While Osmond was spying a “once-in-a-lifetime opportunity”, the problems were pretty acute for the rest of the AIM pubs and restaurants sector with the government’s 10pm curfew now in place. Arguably it could have been worse.

Booze-led Revolution Bars Group PLC (LON:RBG) tumbled 24% to 10p this week after announcing a radical restructuring in the wake of the new restrictions, while pub chains Young’s (LON:YNGA) and City Pub Group Plc (LON:CPC) were down 14% to 835p and 10% to 58p respectively. Loungers (LON:LGRS) was down 15% to 139p, while Franco Manca owner Fulham Shore (LON:FUL) lost 10% to 7p.

Elsewhere in leisure, posh cinema operator Everyman PLC (LON:EMAN) was only down 7% to 81p. Given the bloodshed at larger rival Cineworld (LON:CINE), this ranks as a success and is possibly reflective of the more niche, higher-margin experience approach taken by Everyman, which isn’t reliant (totally) on blockbusters and popcorn.

Turning to the wider market, the AIM-All Share index dipped 2.5% to 948, just outperforming the FTSE 100 which was down 3% to 5,822.

Among the fallers, diagnostics firm Genedrive shed 15% to 128p after admitting it takes extra time to get US approval for its COVID-19 automated laboratory testing due to the nature of saliva samples. Broker InterTrader also trimmed its stake for genedrive to 2.4% from 3.3%.

Elsewhere, marketing consultancy Ebiquity PLC (LON:EBQ) dropped 11% to 20p after turning in an interim loss before tax of GBP1.9mln, although it expects to return to profitability in the second half.

Among the risers, National Accident Helpline owner NAHL Group PLC (LON:NAH) climbed 41% to 56p after revealing that asset manager Frenkel Topping has proposed a takeover bid, though it is too early to confirm whether a transaction will go ahead.

Open Orphan PLC (LON:ORPH) surged 15% to 17p after confirming it is indeed in advanced negotiations with the UK government for a COVID-19 vaccine challenge study as speculated by the press.

The biotech plans to expose 48 healthy volunteers to the virus at a facility in London’s Whitechapel to assess whether its nasal candidate provokes an immune response.

Meanwhile, fast-fashion firm Boohoo Group PLC (LON:BOO) rose 13% to 359p ahead of results next week after announcing it will address issues flagged by an independent review regarding its “weak” corporate governance practices.

Finally, finnCap Group PLC’s (LON:FACP) results suggested the small-cap arena will be vibrant and healthy for the next few months with a flurry of IPOs and fundraisings.

This week payments provider Fonix Mobile and telecoms services provider Calnex announced their intention to float, while bioplastics firm Biome Technologies plc (LON:BIOM) proposed to raise GBP1mln via a placing to speed up growth. No IPOs are in sight for next week, so we’ll have to wait for October.

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