Octopus backs Paul Lilley’s portfolio expansion

Octopus Private Equity has backed the acquisition of iconic London restaurant group Smollensky’s by seasoned restaurateur Paul Lilley, commiting £6 million alongside senior debt from Alliance & Leicester Commercial Bank to support the acquisition.


Octopus Private Equity has backed the acquisition of iconic London restaurant group Smollensky’s by seasoned restaurateur Paul Lilley, commiting £6 million alongside senior debt from Alliance & Leicester Commercial Bank to support the acquisition.

Octopus Private Equity has backed the acquisition of iconic London restaurant group Smollensky’s by seasoned restaurateur Paul Lilley, commiting £6 million alongside senior debt from Alliance & Leicester Commercial Bank to support the acquisition.

In 2005, Lilley established The Shire Group, an asset-based holding company used as an acquisition vehicle for restaurant chains. Today the group owns two brands, Pastiche Bistros and Le Frog Bistros, totalling 14 sites and some £5 million turnover.

The deal was led for Octopus by Alistair Brew and Matt Penneycard. Brew, who joins the board, commented: “This was a complex transaction and one that was completed within a short timetable, but we are delighted to be backing such a strong management team.”

Alliance & Leicester Commercial Bank was the senior debt provider. The team was led by Neil Williams, head of Alliance & Leicester Commercial Bank’s Tyne & Wear Business Centre. He said: “Speed and flexibility were essential to secure this deal, as timescales were very stretching for all concerned. Paul has a strong track record in this sector and has the experience and drive to make his mark on the Smollensky’s brand and maximise its potential.

“It was a very complicated transaction and we delivered exactly what we promised. We are delighted to support Paul Lilley/Octopus in this exciting opportunity.”

McInnes Corporate Finance, led by partners Shawn Bone and Chris Appleby, was an adviser to the purchaser. They said: “The Smollensky’s acquisition represents a great opportunity for The Shire Group to expand into the London market and develop its footprint nationally. This acquisition gives The Shire group real critical mass through a tripling of turnover.”

A team led by senior project director Alison Aslin at Pragma Consulting performed commercial due diligence on the transaction.

Aslin said: “We were commissioned by Octopus to undertake commercial due diligence research into brand strength, competitive positioning, customer segmentation and location evaluation.”

For this assignment, the firm undertook 200 interviews with customers leaving Smollensky’s restaurants; observed demographics and behaviour patterns for a further 50, including night-time visitors; undertook eight focus groups with over 60 customers of Smollensky’s and other competing restaurants; evaluated and audited all key Smollensky’s sites together with their key local competitors.

“This research provided a very sound basis for evaluation of the concept and its potential going forward. Our conclusions included recommendations with respect to: brand, concept, operational issues and service, locations and future potential.”

Marc Barber

Raven Connelly

Marc was editor of GrowthBusiness from 2006 to 2010. He specialised in writing about entrepreneurs, private equity and venture capital, mid-market M&A, small caps and high-growth businesses.

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