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Cara Operations, owner of Swiss Chalet, Harvey's & Milestones, plans IPO


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If they go with a trust route it will be a very profitable IPO. People pay crazy prices to get their hands on the royalty income.


Just on yield alone, assuming they pay out 100% and grow <3%/yr, then Pizza Pizza and Boston Pizza are both pretty fairly valued or over-valued.  Both yield 5%+.  Keg is similar.  I haven't reviewed lately but Keg and Boston Pizza should have better dividend growth.  Sir Royalty Corp on the other hand is over 8% yield and descent growth prospects with the new openings coming online.  I think it is the only Restaurant Royalty that I have left.  Pizza Pizza recently seemed to have too low of a yield with little grow opportunity and likely weak Pizza 73 sales number in ALTA. 

The restaurant royalty corp  payouts have been good and steady but they are getting closer to fair value, expect Sir Royalty (Jack Astors, Loose Moose, etc)

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  • 1 month later...

This looks like another (silent) home run.




According to the most recent documents filed, it will price its shares at $19 to $22, valuing the company at $1.1 billion. A firm price will be set the week of April 6.


Net cost is $100m, I don't think they put more capital in in the last year.  Valuation of their ~40% post money stake is >$350m.


Just glancing, so I may be missing something, but this seems pretty nice.... I think they first bought their stake in Prime Restaurants in early 2012.


Anybody following this one more closely?

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I believe that, in October 2013, Fairfax contributed its 80% interest in Prime Restaurants (fair value of $57m CAD) and added $100m CAD to the CARA investment.  That stake appears to now be worth around $400m CAD, so it appears to have appreciated about 250% over the past 18 months.  Presumably, this is driven by the doubling of CARA’s EBITDA from Cdn$47.9 million in 2013 to Cdn$83.6 million in 2014, as reported in Prem's letter.



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Approx. 250% over the past 18 months is a good investment and not amazing? I would love to hear your portfolio returns!


Fairfax originally put $100m into Prime Restaurants, and then contributed that to get their stake in Cara (at that time it had lost 40% of value or so)... then they added another $100m.  Since then, it has done well, my comment was on their inception in this business, to which I included the Prime Restaurant investment.


So I believe (again, from what Bluedevil said, and my memory) they put in $100m in early '12, and $100m in '13, and now it's worth $350m.


That's a good investment for sure... my original post above was thinking only the first $100m was the basis... in which case I was thinking it was a fabulous one.


I hope that's clear.  My returns recently have sucked, so I'm not trying to throw stones or brag in a backhanded way or anything like that.

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In addition to the very strong return on their overall investment (Prime/Cara) to date---I believe it is perhaps more important to note that while Fairfax's interest in the overall equity of Cara will drop to 40-41% after the IPO they will remain in control of Cara with 53% of the votes.

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