Cinven Said to Approach Banks Over Possible Gondola Exit

Cinven Ltd., a London-based private-equity firm, held discussions with investment banks about a possible sale of Gondola Group Ltd., owner of the U.K.’s Pizza Express chain, three people with knowledge of the talks said.

Cinven, which acquired Gondola in 2006, has held preliminary talks with investment banks assessing options for a sale of all or part of the business, said the people, who asked not to be identified because no decision has been made. An outright sale of Gondola could raise about 1 billion pounds ($1.6 billion), two of the people said.

“We do not anticipate any improvement in economic conditions in the near future and expect the coming financial year to remain tough,” said Chris Woodhouse, chairman of Gondola, in the firm’s 2013 interim report. “We have delivered a resilient performance, despite the challenging backdrop, as the U.K. economy remained under pressure.”

Spokesmen for Cinven and Gondola in London both declined to comment.

Gondola operates some 680 restaurants such as Pizza Express, Ask, Kettner’s and Zizzi. It also owns the Byron burger chain and employs more than 15,000 people. The company has been expanding its Pizza Express franchise chain in the Middle East and Asia, the latest annual report showed.

Gondola’s revenue rose to 591.7 million pounds in the 53 weeks through July 1, 2012, from 569.5 million pounds in the year-ago period, the latest filings show. Operating profit fell to 39 million pounds from 47.7 million pounds in that period. The restaurants reported sales of 577.6 million pounds, up from 556.5 million pounds a year earlier.

Private-equity firms typically pool money from pension plans and endowments with a mandate to buy companies within five to six years, then sell them and return the money and a profit after 10 years. The firms usually charge a management fee of as much as 2 percent and keep 20 percent of the profits from investments.

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