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Bain Capital Credit takes controlling stake in Gail's Bakery

US investment firm Bain Capital Credit confirms investment in Gail's Bakery parent company, Bread Holdings, with key management retained and current Chairman Luke Johnson remaining “invested and on the Board” 

Bain Capital Credit has confirmed an investment in Gail's parent company Bread Holdings | Photo credit: Gail's Bakery

UK bakery and coffee chain Gail’s Bakery has attained significant investment from US investment firm Bain Capital Credit in partnership with food ecosystem fund EBITDA Investment. 

‘The investment brings continuity to the Group, with key management remaining in place committed to the long-term success of the business and the current chairman, Luke Johnson, remaining invested and on the Board,’ Bain Capital Credit said in a press release. 

The value of the deal remains undisclosed, with Bain Capital Credit and Gail’s declining to comment further.  

However, according to a Sky News report, Bain will take control of the London-based Gail's for £200m ($277m), with Johnson retaining a shareholding of around 15%. 

“We are thrilled to partner with industry pioneers Luke Johnson, Henry McGovern, Steven K. Winegar and Tom Molnar to support the Gail’s Bakery and Bread Factory teams in achieving their goal of broadening access to high quality baked goods via new neighborhood Gail’s,” said Sandro Patti, a Director at Bain Capital Credit. 

“Gail’s represents our third investment in food services in the past 18 months and is an important acquisition in our growing portfolio of mid-market businesses in Europe,” added Patti. 

“I want to thank our talented community of bakers, baristas, managers, leaders and support teams who have worked hard to be a leading voice for craft in the UK,” said Tom Molnar, Co-founder and CEO. 

“With the completion of this transaction, I believe we have chosen the right shareholder group to support our goals and growth plans,” Molnar added.  

In a joint press release the companies said they planned to distribute part of the proceeds to nearly 2,000 employees as recognition of their contribution to the Group’s success. 

The deal is part of a long running plan to sell the boutique bakery chain which has been delayed by Brexit and Covid-19 pandemic disruption. 

In May 2021, investment firm Risk Capital Partners (RCP) reportedly engaged banking firm Nomura to explore strategic options for Gail’s parent company, Bread Holdings. 

In October 2018, a planned sale was put on hold due to Brexit uncertainty. Just over a year later, another sale was slated for 2020 only to be postponed due to the pandemic. 

Johnson also backed a management buyout of Gail’s in 2011 through Risk Capital Partners (RCP), when the Group had about £25m in annual sales. Indicating the sustained success of the brand, in late 2019 Gail’s reported sales had exceeded £100m, up from £86.4m the previous year.  

In 2020, the boutique café chain successfully launched a click & collect takeaway service, as well as a home baking range, to maintain sales during Covid-19 trading restrictions.  

Gail’s opened its first site in Hampstead, London, in 2005, and has since expanded its boutique café concept to largely affluent areas across the capital and south-east England. 

Founded in 1998, Bain Capital Credit is a global credit specialist with approximately $48bn in assets under management. In May 2021, the company acquired European food manufacturer Valeo Foods Group. 

EBITDA Investments is a food service industry investment fund backed by entrepreneurs Henry McGovern and Steven K. Winegar.  

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