Soho House, an exclusive club chain that has become synonymous with celebrity culture and creative networks, will return to private ownership in a $2.7 billion (£2 billion) deal after four years of the New York Stock Exchange’s high-profile listing.
The move comes after turmoil as a public company, with its share price halved, and investors questioned its accounting approach, the business strives to balance the global rapid expansion with the exclusivity demanded by more than 213,000 members worldwide.
The deal will allow MCR Hotels, the third largest hotel operator in the United States, to lead a new group of stock investors. Ashton Kutcher, an actor and tech investor, has long been a member and will join the board, while MCR CEO Tyler Morse will serve as vice chairman.
Existing major backers will remain in place, including US retail billionaire Ron Burkle, who owns 40% of the shares, restaurateur Richard Caring 21% and 8% of Goldman Sachs. Founder Nick Jones (pictured) opened his first SOHO home on Greece Street in London in 1995, retaining 5% of his.
New investors will buy stocks at $9 per person, at 83% before interest cancellations late last year. However, this still values Soho House’s bottom $2.8 billion peak briefly reached in 2021. The $2.7 billion corporate value includes approximately $700 million in debt.
When Soho House went public in 2021 as a member group, it was considered a lifestyle inventory of the Instagram era: a global network of clubs, hotels and restaurants with celebrity cachets and Grassational brands.
At its peak, the company had doubled its revenue for three years, with a rapid opening from Mumbai to Los Angeles, waiting to list thousands of people. But the gloss quickly disappeared.
Stocks fell from $14 in August 2021 to $7.64 last week, reflecting investors’ uneasiness – a total of $739 million in four years in the market – and inherent contradictions, chasing the global fast-growing contradiction while sales exclusivity.
Criticism also comes from radical investors. The third point of the hedge fund run by billionaire Dan Loeb urges Soho House to provide new investors to new investors, even considering a competitive bidding process. Short sellers such as Glasshouse Research have raised questions about the company’s accounting, although these accounting have been rejected.
CEO Andrew Carnie said the return to private ownership would allow Soho House to breathe space to implement its expansion strategy without the need for quarterly review of Wall Street.
“Returning to privatization allows us to build on this momentum with the support of world-class hospitality and investment partners,” he said. “I am proud of our team’s achievements and excitement for our future as we continue to be guided by our members and take root in the spirit that makes Soho House so special.”
In recent years, Carney has tried to make the company more lean. Management believes that operational efficiency improves profitability, and Soho House reports three consecutive net profits.
For MCR Hotels, known for assets such as New York’s TWA Hotel and High Line Hotel at Kennedy International Airport, the deal provides a portal for the profitable high-end lifestyle sector. The group acquired London’s BT Tower for £275 million last year and plans to convert it into a hotel, and the group has also made substantial investments in the UK.
Ashton Kutcher’s appointment reflects Soho House’s desire to integrate cultural cuisine with strategic investment. Kutcher has a history of supporting technology startups from Uber to Airbnb and is likely to attract media attention and the credibility of Silicon Valley.
For a business that has long relied on its star-studded clients (from Kate Moss and Kendall Jenner to the Duke of Sussex), their first date on Dean Street House – his arrival may also help Soho House’s brand status to make it ambition and innovation.
The club now has 48 locations open or developed globally, with 10 in London alone. The annual fee ranges from £1,000 to £2,920, depending on the level of access. However, expansion at this rate presents challenges: long-term members complain about crowding and exclusive dilution, while increasing fees have the potential to make the price of young creatives priced.
This deal is unlikely to change the membership experience in the near term. However, support from MCR hotels could accelerate real estate development, with new locations expected in Europe, Asia and the United States.
For investors, the deal ends a turbulent chapter in Soho House’s history as a listed company. While public markets strive to value its hybrid model of hospitality, lifestyle and membership, private equity consortiums seem to be betting on their ability to make money from Wall Street’s scrutiny.
The question is whether Soho House can retain its aura of exclusivity while further expanding into new cities and markets, or whether its biggest assets (its brand mystics) are likely to dilute in the pursuit of growth.
