Soho's Groucho Club Set For £40m Buyout Deal

Founded three decades ago in London's Soho, it has become one of the world's most famous - and infamous - private members' establishments.

Now (NYSE: DNOW - news) , the Groucho‎ Club is on the verge of a £40m management buyout that will introduce a string of new investors and provide a springboard for expansion into the US.

Sky News understands that Matt Hobbs, the company's chief executive, is assembling a management buyout of the business seven years after it last changed hands.

Populated by A-list celebrities, some of whom - such as the Spice Girls - have sometimes been unceremoniously refused entry, the Groucho Club has become a renowned meeting place for actors, comedians and media executives.

The venue got its name from a phrase uttered by Groucho Marx of the Marx Brothers comedy act, who said he had resigned ‎from a club because he did not want to belong to an establishment that would accept people like him as a member.

Such was the venue's success at attracting members that a rival Soho club was said to have been launched purely to cater for rejected Groucho applicants.

Insiders said the deal being put together by Mr Hobbs would involve diluting the ownership of Graphite Capital, a private equity group which took control of the Groucho ‎Club in 2008.

‎Among the new shareholders will be Alcuin Capital Partners and a vehicle set up by Ian Armitage, a former executive at Hg Capital, another London-based investment firm.

Graphite (Other OTC: GRPH - news) will reduce its stake as part of the buyout but will retain a minority interest, sources said.

The deal could be announced to the Groucho's more than 4,000 members as soon as this month, they added.

Mr Hobbs, who has opened pop-up versions of the Groucho at the Hay literary festival and in Ibiza, wants to use the new funds to accelerate refurbishment of the London site and to open another club in New York.

Prior to Graphite's ownership, the Groucho had attracted several prominent shareholders, having a spell as a public company as well as being backed by the chocolate heir Joel Cadbury and Matthew Freud‎, the public relations magnate.

A spokesman for the Groucho declined to comment on Friday.