Chain of stores in search of Fresh investment

The owners of upmarket convenience store chain Fresh are seeking to raise €16.4 million from private clients of Goodbody Stockbrokers to expand their network of outlets from three to eight by the end of 2008, writes Ciarán Hancock.

Goodbody's clients are being offered the opportunity to invest €12.9 million in an entity called PropCo, which will own the sites or shop leases. This will give them 80 per cent of PropCo, with the company's current owners retaining a 20 per cent stake.

In addition, the private clients are being offered 20 per cent of an entity called OpCo, which will operate the convenience stores and owns the brands, for €3.5 million.

Fresh is owned by property developer Simon Kelly, accountant David Kelly, retailer Noel Smith and Conor Whelan, a former managing director of BWG Foods. They will contribute €11.3 million in equity and plan to leverage the fundraising with €31 million in debt from AIB.

Fresh began trading in January 2006, and operates stores in Smithfield, Northern Cross and Grand Canal Square in Dublin. It plans to add outlets at Camden Street, the IFSC and another unnamed location in Dublin in the short term. It is also thought to be close to securing a site in Belfast.

The Smithfield store generated revenues of €5.5 million in the year to the end of July. Northern Cross and Grand Canal Square, which are newer shops, earned €2.2 million between them in the three months to the end of July.

Goodbody hopes to close the fundraising by the end of September. It is projecting a 15 per cent internal rate of return per annum on the investment, which is likely to last up to seven years.