Bain Capital’s Special Situations unit has entered the bidding for Costa Coffee, submitting a first-round offer for the UK’s largest coffee chain, which Coca-Cola is selling at an expected valuation of about £2bn, the FT reports.

Coca-Cola, which bought Costa for £3.9bn in 2018, has struggled to achieve returns from the investment. Costa posted a £13.8m loss in 2023 on revenue of £1.2bn, even as Coca-Cola took an £85m dividend. CEO James Quincey admitted in July that the chain was “not quite delivered” on expectations. Lazard is advising on the sale.

Founded in London more than five decades ago, Costa operates over 2,700 outlets across the UK and Ireland, making it the second-largest global coffee chain after Starbucks. Rising labour costs, ingredient inflation, and weak consumer demand have weighed heavily on performance since the pandemic.

Bain’s Special Situations arm, established in 2018 to invest in complex assets, already owns upmarket bakery chain Gail’s and was part of the group that took control of PizzaExpress during the pandemic. Other private equity interest in Costa includes TDR Capital, owner of Asda, while Apollo declined to submit a bid.

Bain Capital manages $185bn globally, with UK investments also spanning Kantar and other consumer-facing businesses.

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