- ELTA is really mostly the UK franchise of Fridays, the popular American-themed casual dining restaurant, which will be spun out to shareholders in next few months.
- The implied valuation of the new entity, Hostmore, is ~6-7x EV/EBITDA for a growing franchise likely taking share and earning peak margins post-pandemic. This is a huge discount to comps.
- In the next few months, I expect UK fund managers to buy up Hostmore - with a cleaner growth story and less debt - to Restaurant Group's valuation (10-11x normalized EV/EBITDA).
- This would imply ~80-90% upside even according to a very low valuation to Hotter, ELTA's other remaining asset, at around 4x EV/EBITDA.
For further details see:
Electra Private Equity: Cheapest Listed Pure-Play U.K. Restaurant Exposure Hiding In Plain Sight