Gail’s backers hire Goldman Sachs to bake plan for new owners

25 November 2024, 11:02 | Updated: 25 November 2024, 12:23

The owners of Gail’s, the fast-growing chain of bakeries which found itself at the centre of a row about the gentrification of London suburbs earlier this year, have hired bankers to handle a sale that should yield a handsome windfall for them.

Sky News has learnt that Gail's shareholders have instructed Goldman Sachs to run an auction of Gail's next year.

Banking sources said the appointment had taken place in recent days, and was likely to lead to a partial or full exit for the company's existing backers.

Gail's parent company, Bread Holdings, announced in September 2021 that it had secured new investment from Bain Capital Credit and EBITDA Investments, the food investment fund spearheaded by industry entrepreneurs Henry McGovern and Steven Winegar.

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Luke Johnson, the prolific hospitality investor who engineered the sale three years ago, remained as an investor through his private equity firm, Risk Capital Partners, and as a board member.

Analysts speculated that the company could be worth as much as £500m, having expanded rapidly since the last deal.

Bread Holdings said at the time that it would distribute an unspecified share of the proceeds to nearly 2,000 employees.

Gail's has become an omnipresent fixture on high streets across London and in affluent areas of the country.

It opened its first site in Hampstead in 2005.

In August, it became embroiled in a row over its expansion into parts of London including Walthamstow in north-east London, amid accusations that its presence is contributing to the homogenisation of high streets.

Tom Molnar, Gail's founder, responded to the row, telling The Times: "We build small sites so they are a part of a diverse high street, so whenever I build a Gail's I think what it would be like if I was a resident here.

"I'd encourage people to look at what we're trying to do, rather than taglines.

"There's good independents and bad, and good chains and bad chains."

Part of Bread Holdings, its sister company, The Bread Factory, is a leading independent bread producer supplying premium customers and supermarkets.

At the time of the last deal, Gail's had just over 70 bakeries trading across the country, with that figure now standing at more than 130.

It has dozens more sites in the pipeline, and although concentrated in London, it now has bakeries in locations such as Brighton and Oxford.

The precise timing of an auction was unclear on Monday, as was the likely field of bidders.

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Some industry sources had speculated in recent weeks that the impact of the Budget on hospitality businesses might cause the sale to be delayed.

The sector's leading trade body has warned of business closures and job losses as a result of the twin hikes to the national living wage and employers' national insurance contributions.

Goldman Sachs declined to comment, while Bain Capital, EBITDA Investments and Mr Johnson have all been contacted for comment.