Noble & Company is aiming to raise £8.8m through a second share issue for the capital pub company enterprise investment scheme (EIS).
This EIS will use the money raised to broaden its existing portfolio of five pubs. It will buy 15 more pubs within the M25 area and will also make improvements to the pubs it already runs. Around 75 per cent of the public houses will be freehold, while the remaining 25 per cent will be leasehold.
The first share offering in February 2001 raised £7.8m and a further £8.8m to finance 15 more public houses would allow the EIS to negotiate discounted deals with their suppliers. This could increase profit margins for the benefit of investors.
The company's board of directors includes David Bruce, founder of the Firkin pub chain and Clive Watson, who helped establish the Tup Inns pub chain. They believe there is a gap in the market for local pubs that are not part of a chain or tied to a specific brewery. Instead, the capital pub company will develop and manage pubs on an individual basis to serve local people in London. The target premises will be alcohol-led, although some food is likely to be available.
This EIS could benefit from breweries such as Whitbread and Scottish & Newcastle selling off pubs, but there is still no guarantee that suitable buying opportunities can be found. It could interest high-net-worth clients who want to defer capital gains tax, but they would need to be aware of the high risks of investing in an unquoted company like the capital pub company. Investors might also find it difficult to get out of the investment because there is nowhere to trade the shares.