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Activist investor Irenic Capital Management is building a stake in SSP Group and plans to push the Upper Crust owner to boost its profitability, setting the stage for a private equity takeover.
Irenic has amassed around a 2 per cent stake in the FTSE 250 company, which operates food outlets in airport and railway stations, according to three people familiar with the matter.
The New York-based hedge fund is pushing the company to boost its profit margins, arguing that its share price could be worth double its current valuation.
The activist, which plans to continue buying shares, has met on several occasions with management but has yet to outline specific demands to the company, two of them added. The investor has previously targeted Wagamama owner The Restaurant Group in the UK, which was sold to Apollo in 2023.
Irenic declined to comment. SSP said: “We are in constant dialogue with all of our investors, and welcome their feedback and views . . . We are entirely focused on delivering progress against our clear strategic priorities in order to deliver sustainable growth and returns for all of SSP’s stakeholders.”
SSP has struggled to recover after the pandemic. The group, which also owns Ritazza and operates travel outlets of Burger King and Marks and Spencer, has suffered amid a slow recovery in rail travel which has failed to rise back to pre-pandemic levels.
Shares in SSP, led by chief executive Patrick Coveney, closed at 150p on Thursday afternoon, giving the company a market value of £1.2bn.
Coveney said on an earnings call in December: “While the pace of transition from Covid recovery to a business with demonstrably strong returns has been fast, it hasn’t been fast enough.”
Irenic, which manages a fund worth around $1.4bn, is one of several activist hedge funds recently launched by alumni of Elliott Management, the world’s largest activist investor.
It was co-founded in 2021 by Adam Katz, who spent nearly a decade at Elliott, and Andy Dodge, who previously worked at Indaba Capital Management, a US-based value investor.
In 2023, Irenic built a stake in The Restaurant Group. The firm, alongside fellow activist Oasis Capital Management, agitated for changes, including asset sales. Within months The Restaurant Group had agreed a £506mn sale to private equity firm Apollo Global Management.
SSP’s recovery from the pandemic has been hampered by cost inflation. The group’s operating profit margins, on an adjusted basis, were six per cent last year, compared with eight per cent in 2019. The group made operating profits of £219.2mn on sales of £3.4bn last year.
While the company has a big presence in Europe, SSP’s business in India could prove particularly lucrative. The company has plans to publicly list the unit, a joint venture called TFS, later this year. Investors expect the venture to be valued at around a £1bn valuation upon its initial public offering.
Irenic’s shareholding in SSP currently sits below the UK disclosure threshold of 5 per cent, at which point it would be required to notify regulators.
