Nightcap set to delist from AIM in one other blow to London markets

Hospitality group Nightcap is set to become a private company, with the firm preparing to delist from London’s AIM market.

Nightcap, which was founded by ex-Dragons’ Den star Sarah Willingham, told shareholders on Friday that its true value was not reflected by in its share price, though it was once again forced to cut trading performance expectations for the year.

It potentially marks the latest exit from London’s markets driven by concerns about valuation, liquidity and cost, which have also prompted more companies to stay private for longer than they previously might have done.

Nightcap founder and chief executive Sarah Willingham

Nightcap shares fell more than 50 per cent to 1.6p in early trading on Friday, having fallen 87.2 per cent from their January 2021 listing price of 13.5p and 94.9 per cent from an April 2021 peak of 34.5p. 

The group, which earlier this year was forced to abandon an attempted takeover of troubled rival Revolution Bars, has endured tough trading in recent times with Nightcap slashing performance expectations in March.

It blamed railway strikes, increases in business rates and consumer cost-of-living pressures after pre-tax losses doubled year-on-year to £1.8million in the six months ending December 2023.

And now Nightcap says adjusted earnings before nasties will likely come in below expectations amid a ‘challenging’ 2024 for the hospitality sector.

It said: ‘The main headwinds are from the continuation of the cost of living crisis, above inflation increases to business rates and other costs as well as the impact of the increase to the National Living Wage and ongoing rail strikes.’

The owner and operator of 46 premium bars said it had also evaluated ‘the value that the current market capitalisation ascribes’ to it, the liquidity of its shares and Nightcap’s ‘ability to raise further equity through public markets at an acceptable price and the cost of maintaining a public quotation’.

Nightcap said it had ultimately concluded that delisting was in the best interest of shareholders, 76.9 per cent of whom have already backed the decision.

Chair Gareth Edwards said: ‘We have not taken this decision lightly, however, following an extensive review and deliberation to ascertain the most effective way to maximise shareholder value in the longer term and increase the potential for the long-term success of the company, the board has unanimously concluded that it is in the best interests of the company and our shareholders to cancel our AIM admission and re-register as a private limited company.’

Since its founding at the height of the Covid-19 pandemic, Nightcap has grown through acquisitions and by capitalising on the depressed commercial property market to open bars on more commercially favourable terms.

Its takeovers have also included Latin American-inspired Barrio Familia and the Adventure Bar Group.

The attempted acquisition of Revolution Bars followed the takeover of cocktail bar chain Dirty Martini and acquisition of bar operator The Piano Works.

Over the medium term, founder Willingham has said she wants to double the size of Nightcap’s estate to more than 100 venues.

On 17 July, investors will have the chance to vote officially on the delisting proposal, which is set to become effective at 7am on 29 July.

Edwards added: ‘The board believes that Nightcap’s current public market valuation does not reflect the underlying potential of our business or our achievements to date and that this is unlikely to change in the short-to-medium term. Since our last institutional fundraise in May 2021, we have demonstrated several times that we can access funding from non-institutional sources at a premium to our share price at the time.

‘We believe that we will be able to continue to execute on our strategy as a private company and therefore we believe that a cancellation of the company’s admission on AIM is in the best interests for shareholders and for the future of our business as a whole.’