Nando’s billionaire backer swallows £128m debt

Nando's food on a table
Nando's losses have hit £25m Credit: Kris Kirkham

Nando’s reclusive billionaire owner has refinanced £128m of debt as rivals reel from a crunch on the high street.

Insurance tycoon Dick Enthoven, one of South Africa’s richest men, swapped the loan for shares in the business according to accounts filed this week. Sources said the decision was designed to free up Nando’s balance sheet to fuel expansion.

The chicken chain insisted trading has been robust despite tough competition, with sales up 8pc in the year to February and rising above £1bn for the first time.

But this failed to put the chain into profit, with losses hitting £25m – a quarter higher than the previous 12 months.

A source said the debt for equity swap should be seen as a vote of confidence in Nando's on the part of shareholders.

Nando’s has historically managed to avoid the carnage hitting the customers dining industry as customers stay away, where a raft of players have gone bust including celebrity chef Jamie Oliver's Italian chain.

Even long-established rivals such as Pizza Express are struggling to secure their future.

By contrast Nando’s – which employs more than 21,000 staff worldwide – claims to have never shut a UK restaurant.

Its UK subsidiary Nando’s Chickenland managed to stay in the black despite losses abroad, posting a 16pc rise in pre-tax profit to £96m.

Meanwhile, the company insisted a no-deal Brexit would not lead to a shortage of chicken. While Brexit uncertainty could hold back growth it said that leaving the EU without an agreement will not harm operations or change profit forecasts.

Nando's says it has never shut a restaurant in the UK

Nando’s was founded in 1987 by Robbie Brozin and Nando Duarte with the help of a start-up loan from Mr Enthoven. UK operations are headed by the tycoon’s son Robby Enthoven, 51, who was originally brought on board in 1993 when Nando’s had just two branches in London.

His brother Adrian is the chairman of insurance company Holland Group, which first made its mark in South Africa in the early 1980s.

The majority of Nando’s loans, which totalled £1bn in February, are owed to offshore funds controlled by the Enthoven family.

Debts of £127.7m were due to be repaid in May 2019. The owners decided to swap them for additional shares in the business – a move that is hoped will reduce interest costs and free up cash to invest in growth.

Nando’s said in its financial statements that no further debt repayments were due until 2022.

The Enthoven family was subject to reports in 2014 that it had used a number of offshore holding companies to legally reduce its corporation tax bill.

The 2019 accounts revealed the Nando’s parent firm paid more than £13m in tax, despite being in the red.

Nando’s stores provide a glimmer of insight into the otherwise secretive world of Enthoven senior. About 5,000 pieces of art are showcased in restaurants: the largest collection of contemporary South African work in the world.

In a rare interview in 2010 Mr Enthoven said: “I never buy anything with the view of selling it or to invest in it. I buy it because I enjoy it, because it is important to have it.”