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Tuesday, October 23, 2018

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News > Case Studies

OakNorth provides £42m loan to nationwide pub operator

Martin Greenland | 07:28 Wednesday 10th October 2018

OakNorth has completed a £42m loan to Red Oak Taverns to support the national pub operator’s continued expansion across the UK.

The facility from OakNorth is the specialist bank’s largest deal to date and will be used to refinance existing debt and provide Red Oak Taverns with stand-by financing for future acquisitions.

Red Oak Taverns – which comprises 161 mainly leased and tenanted pubs – is privately owned by its co-founders Mark Grunnell and Aaron Brown and a small number of individual investors.

The pub estate is mainly concentrated in the South, South West, North West and the Midlands. 

“This was a competitive process, but OakNorth was able to differentiate itself from other lenders by structuring a flexible and bespoke debt finance package for us, which significantly reduces our cost of capital and enables us to release funds, as required, in line with our acquisition strategy,” said Mark.

“The team [has] a thorough understanding of the market and – having already worked with us during the previous two years – fully understand how we run our business and drive our profitability and net asset value.

“[It has] also bought into our future growth plans, providing us with the financial firepower to take advantage of small- and medium-sized acquisition opportunities.

“We particularly enjoyed meeting [the] credit committee and being given the opportunity to discuss our borrowing requirements directly with the decision makers.”

Commenting on the transaction, Mohith Sondhi, debt finance director at OakNorth, added: “Since our launch in September 2015, we have been focused on one thing: helping UK businesses achieve their growth ambitions, backing excellent management teams in the process.

“Both Mark and Aaron have proven with Red Oak Taverns that they can effectively acquire and integrate pub groups and continue to drive the business forward, even through uncertain and challenging economic conditions.

“Their successful ‘buy-and-build’ strategy has seen them grow to 161 sites in less than a decade and demonstrates the incredible ambition of the business.

“We are delighted to have supported them in this transaction and look forward to working with them on their continued growth in the future.”

In August, OakNorth completed a £40.2m property investment loan to Select Property Group.

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