The primary reason for Membership Collective Group going public is to pay debt down
Shares in the Membership Collective Group, the parent company of the private members’ club chain, Soho House, took a dive on Friday, a day after its debut on the New York Stock Exchange.
At the time of writing, shares in the Membership Collective Group are down by 9.57% to $12.66.
The private members’ club group raised $420m via an IPO, after it sold its stock at $14 per share, the lower end of the range it had suggested to potential investors.
Senior people at the company were seeking to pull investors in with lofty plans to extend the Soho House membership model.
Openings in other major European cities were touted including Paris, Rome and Tel Aviv.
Membership Collective Group was hoping to pay down a significant portion of its debt with the money raised from the flotation.
Having raised $450m, it tends to use $223m to lower its $600m of net debt. Interest payments on its debt dragged on its balance sheet during Q1 of the current financial year.
“The main reason for going public is to pay that debt down. We don’t really need it for capital investment,” said Andrew Carnie, MCG global president.
Membership Collective Group has over 119,000 members, while its waiting list holds more than 48,000 applicants.
The company is of the view that it is in a strong position to do well over the coming months as lockdowns ease, while only 10% of subscriptions were cancelled.
Membership Collective Group’s goal is to increase membership revenues from 26% of the total amount to over 50%.
The chain is expecting to post a loss for the year.
