Slug & Lettuce Owner To Drink To £1bn Float

The owner of the Slug & Lettuce and Yates' pub chains is joining a growing queue of companies preparing to float on the London stock market.

Sky News understands that Stonegate, which is the UK's fourth-largest owner of managed pubs, has begun sounding out investment bankers about a listing that would probably take place during the course of 2016.

Insiders said that Stonegate, which was formed in 2010 from the acquisition by TDR Capital, a private equity firm, of 333 pubs from Mitchells & Butlers (LSE: MAB.L - news) , was likely to be valued at just under £1bn, including approximately £300m of debt.

A listing would be the first by a major pubs operator for some time and would follow an intense period of restructuring by many of Stonegate's rivals, such as Punch Taverns (LSE: PUB.L - news) .

TDR, which also owns businesses including David Lloyd Leisure, the health and fitness clubs operator, is expected to appoint bankers to work on the listing shortly.

A flotation would not take place before the end of this year, a source said.

In total, Stonegate owns more than 600 pubs and bars across the UK, with formats ranging from high-street pubs and traditional country inns to local community pubs, student pubs and late-night bars and venues.

Since its initial deal with M&B, Stonegate has grown through further acquisitions, including that of Town & City Pub Company in 2011 and assets owned by Living Room and Bramwell Pub Company two years ago.

Britain's pubs sector was battered by the financial crisis and the ban on public smoking, but the fortunes of some operators have recovered since then as they have focused on cost-cutting amid an improving economy.

M&B, which has a market value of nearly £1.9bn, has seen its shares rise by more than 10% during the past year, while shares in Enterprise Inns (LSE: ETI.L - news) , which has a larger tenanted pubs estate, have risen more modestly over the same period.

The City is anticipating a strong pipeline of company listings throughout the rest of this year, including those of Worldpay, the payment processing group which could be valued at more than £6bn; Center Parcs, which is also holding talks about a £2.5bn sale; and Gala Coral, the betting and bingo group.

TDR could not be reached for comment on Monday.