On Monday, Britain was able to head to the pub again — well, the pub garden at least — and have an outdoor, socially distanced pint. It is perhaps no coincidence that in the week the country became reacquainted with boozers again, NewRiver unveiled plans to spin off its substantial pub portfolio.

The listed retail and leisure firm said in a trading update that it would look to divest its pub portfolio, called Hawthorn Pubs, possibly through an initial public offering to create a new listed pub company. NewRiver Chief Financial Officer Mark Davies, who has been serving as CEO of Hawthorn since 2019, will become CEO of the stand-alone company.

The portfolio comprises more than 650 pubs, which it describes as local community pubs, and is valued at around £260M, a figure that includes pubs that have been converted into convenience stores.

The enforced closure of pubs during UK national lockdowns has hit Hawthorn’s income hard. In the six months to 30 September 2020, Hawthorn’s net income was £3.5M, compared to £13.6M for the same period in 2019. Of the drop, £6.4M was a result of the impact of Covid-19, £3.8M was support for the tenants managing and operating the pubs and £200K was related to beer having to be destroyed.

But NewRiver is confident its pubs will bounce back now that lockdown is over. It said that 60% of the portfolio reopened on 12 April. It said that last year, in the period from July to September when its pubs reopened, like-for-like sales in its leased and tenanted pubs were 92% of the year before, and sales at its operator-managed pubs were 84% of the year before, both ahead of industrywide averages.

The fact that pubs are struggling but expected to bounce back has attracted the attention of opportunistic investors. In March, Oaktree Capital Management backed former Greene King CEO Rooney Anand with up to £200M to set up a new pub company called RedCat. The company is in talks to buy 42 pubs from Stonegate, Sky News reported.