Lion asks Rothschild to advise on £250m sale of Wagamama

PRIVATE equity firm Lion Capital is understood to be re-examining an exit of Japanese noodle chain Wagamama after cancelling a flotation of the business three years ago.

Rothschild, the investment bank, is advising Lion on a sale process which could value Wagamama at between £200m and £250m. Rothschild was involved in the initial public offering (IPO) attempt in 2007 before it was aborted due to investor concerns over the £225m price tag and choppy stockmarket conditions.

Wagamama has expanded rapidly in recent years. It has 66 outlets in Britain and 39 restaurants in Europe, the Middle East and Africa. The group’s eateries in London have been known to turn over 12 sittings a day.

Wagamama recorded a pre-tax profit of £12.8m on sales of £98m in the year to April 2009, according to the most recent accounts at Companies House. In their outlook, directors said the firm had “considerable potential for growth” over the long term but warned of short-term weakness in consumer spending.

Wagamama has changed hands several times since it was founded by restaurateur Alan Yau in 1991.

Yau sold out to Graphite Capital and entrepreneur Rory McCarthy in 1998, before Lion bought a majority stake from Graphite for £103m in 2005. At the time of the scrapped IPO, Lion owned 77.5 per cent of Wagamama while employees owned 22.5 per cent. Senior staff, including chief executive Steven Hill, will be in for a multi-million pound windfall should a sale go ahead.