Here’s cheers

The humble Australian pub holds a special place in the Australian psyche – and in the place of the psyche of some of Australia’s wealthiest people.

Bruce Mathieson, Ken Talbot and Chris Morris are just some of the wealthy entrepreneurs who hold or have held pub assets during the careers, and made handy profits from doing so.

Add to the list of wealthy pub owners investment banker Mark Carnegie and veteran advertising man and investor, John Singleton.

Carnegie’s firm, Lazard Carnegie Wylie Private Equity, has announced it will set up a $100 million fund to buy distressed assets from struggling pub owners.

Lazard Carnegie will put in $30 million, wealthy individuals including Singleton will stump up $20 million and there will be $50 million in debt.

“We think about $4 billion worth of pubs will be traded in the next 12 to 24 months,” Carnegie told the Australian Financial Review.

“It’s a simple case of more buyers than sellers.”

Carnegie and Singleton believe pub prices have fallen a massive 50% from their peak, so they appear to have got their timing pretty right.

While the economy is recovering and conditions in the hospitality sector are improving, the pub sector remains riddled with owners who bought in the boom years of 2004 to 2006 and took on far too much debt to do so.

Those operators – or more likely, their banks and financiers – are sure to be looking for an exit now that the economy has improved just enough to make the asset sales easier.

The new fund will also tread a path recently taken by Chris Morris, who bought several prime hotels in Melbourne from a collapsed hotel group last year.

These wealthy entrepreneurs are likely to do very, very well out of these deals. Well run pubs in good locations can make seriously good money – and profits will only improve as economic conditions do.

All of which should ram home that great lesson about the rich – there timing is always spot on.