New funding to fuel Menzies expansion

Derbyshire-based Menzies Hotels plans to buy more hotels in the UK after securing extra funding of up to £30m.

The new investor is venture capital firm BancBoston Capital, which has led the acquisition of a 55% stake in Menzies for £11.5m in cash.

BancBoston and another investor, Indigo Capital, have promised another £10m in loans and shares and this is expected to attract further loans of £20m.

Chairman Nick Menzies said the company would use the money to finance new hotel acquisitions and joint ventures. The company is looking to areas of the UK where it does not already have a presence, such as Glasgow, the North-east and the South-west of England. It will also look at hotels in London "if the price is right".

Buying a rival group is the favoured option. "We are much more focused on doing a corporate transaction because it's much easier to buy a group of hotels than a single acquisition, but it does very much depend on the opportunities," Menzies said.

Investors whose stake was bought out included venture capitalists 3i, Granville Baird and Murray Johnston, as well as the Royal Bank of Scotland. Nick Menzies retains a 45% stake.

Founded in 1992, Menzies owns and operates 18 three- and four-star hotels throughout England, including the 103-bedroom Avant hotel in Oldham and the 99-bedroom Mickleover Court in Derby.

The company appointed advisors back in February to help it look at ways to expand the firm. Options included selling the company or merging with a rival as well as finding new backers (Caterer, 24 February, page 11).

In 1998 it abandoned plansto float on the London Stock Exchange.

by David Shrimpton