Activist hedge fund Irenic Capital Management has built a stake of around 2% in SSP Group, the FTSE 250-listed operator of Upper Crust and Ritazza, positioning the firm for a potential strategic shake-up that could lead to private equity interest.

Irenic is urging SSP to improve its profitability and believes the company’s shares are undervalued, with potential to double in price. The investor, which manages approximately $1.4bn, has held discussions with SSP management but has not yet issued formal demands. It plans to increase its stake further.

The firm is no stranger to public-to-private scenarios. In 2023, it helped drive The Restaurant Group’s £506m sale to Apollo Global Management, alongside Oasis Capital Management.

SSP has struggled to recover from the pandemic, facing persistent cost inflation and a slower-than-expected rebound in rail travel. Its adjusted operating margin dropped to 6% in 2023, from 8% in 2019, despite generating £219.2m in operating profit on £3.4bn in sales. The group’s market capitalisation currently stands at £1.2bn.

Led by CEO Patrick Coveney, SSP has said it remains focused on delivering its strategic priorities. “While the pace of transition from Covid recovery to a business with demonstrably strong returns has been fast, it hasn’t been fast enough,” Coveney noted in December.

The company’s India joint venture, TFS, is also expected to float later this year with an anticipated valuation of around £1bn, further enhancing the group’s appeal to prospective buyers.

Source: Financial Times