Soho House is known the world over for being an exclusive club for creative minds. Proudly eschewing corporate culture, Soho House clubs welcome the movers and shakers of tomorrow; the creators and inventors from art and film to academia and other forward-thinking industries. So it’s a little jarring to hear that the free-thinking Soho House is planning an IPO – offering shares first to group members, of course.
Soho House’s IPO?
The group behind the ultra-trendy Soho House, Membership Collective Group, confirmed this week plans for a Soho IPO, filing for one with the New York Stock Exchange. A statement from Membership Collective Group announced the plans; “Membership Collective Group (‘MCG’), a global membership platform comprised of Soho House, Soho Works, The Ned, Scorpios Beach Club and Soho Home, and related digital platforms, today announced that it has filed a registration statement on Form S-1 with the U.S. Securities and Exchange Commission (‘SEC’) relating to a proposed initial public offering of shares of its Class A common stock. The number of shares to be offered and the price range for the proposed offering have not yet been determined. MCG has applied to list its Class A common stock on the New York Stock Exchange under the ticker symbol ‘MCG’.”
Despite Soho House’s dyed-in-the-wool and proven anti-corporate legacy, MCG is working closely with some of the biggest corporate Wall Street companies in the world. The statement continues, “J.P. Morgan and Morgan Stanley will serve as joint lead book runners for the proposed offering. Goldman Sachs & Co. LLC, BofA Securities and HSBC will be joint book runners. Citibank will serve as a co-manager.”
So why would the lassez-faire, creative collective turn corporate-adjacent all of a sudden? To understand the move, it’s good to take a look back at Soho’s history and understand where they’ve been to see where they’re at.
History of Soho House
In 1995, restauranteur Nick Jones saw an opportunity. The upstairs space over his French restaurant Café Boheme became available for lease. But the space was unique; it wouldn’t work for a restaurant, Jones’ area of expertise. However, it would work for something else, something special. It was perfectly placed and designed to function as a private club, and Jones went full-steam ahead on the idea once securing the flat. Jones intended for his new club to fly in the face of London’s stuffy, uppercrust clubs that catered only to the wealthy and dull.
Per Eater, “This club would cater to the creative types increasingly flocking to the city’s Soho neighborhood, especially young people working in film and media. ‘We wanted it to be creative and like-minded, and for people who were at ease with themselves,’ Jones tells Eater.”
Jones focused his clubs on the atmosphere; he wanted them to be a character and almost a member of the club themselves. Each club is unique and borrows from the local flavor of its location, lending a warmth and friendliness to guests lucky enough to make it through the front door.
Jones opened several more Soho Houses, eventually crossing the Big Pond to New York. Per Eater, “The New York Soho House didn’t open in Soho, but in the Meatpacking District — a then-edgy neighborhood home to Sex and the City’s Samantha Jones, who crashed Soho House’s pool deck with a spurious membership in Season 6. The members-only social club concept caught on in New York, but not just among the young film and media industry players that defined the brand. Somehow, the ‘wrong crowd’ managed to infiltrate New York’s Soho House — a crowd of corporate suits.
Even after requesting that members not wear suits and ties at the club, the New York Soho House ‘didn’t have the right feel anymore,’ as Jones told the New York Post in 2010. Soho House culled the New York membership list in an effort to ‘get the club back to its creative roots,’ effectively kicking out hundreds of corporate-leaning members, a move that was controversial, but effective in restoring the club to the appropriate level of cool, Jones said in the Post.”
The vetting process for membership is strict; it prizes cultural capital over financial capital, and yearly memberships cost several thousand dollars once you’re even accepted. No press allowed, and members are asked to keep a strict confidentiality for other members. There’s rumored to be a waiting list that’s tens of thousands of people long, so if you’re thinking it’s time to get a Soho membership, plan ahead. Way ahead.
After Soho rebuked the suits and ties in New York, it got down to the business of growing a community of like-minded individuals who would continue shaping tomorrow’s creative future. In 2012, billionaire entrepreneur Ron Burkle bought a majority stake in the company, guiding it alongside Jones and Richard Caring, who both own minority stakes.
As of the IPO filing, MCG owns 28 Soho Clubs. Its restaurants and home decor brand bring in the most memberships and money, and 119,000 members call Soho Club their own around the world.
But none of that, not the roots of Soho nor the continued growth and success, explain why the company that would drop a dueling glove at the feet of corporate Wall Street would suddenly change their minds. So what does explain it? In a word: COVID.
Soho Isn’t About Profit, it’s About Growth and Creativity
Per Bloomberg, “Coronavirus pandemic lockdowns hit the company hard, with revenue slumping to $384 million in 2020 from $642 million a year earlier, the filing shows. Still, total membership revenue grew during the period as sign-ups across other brands helped offset a small decline in Soho House customers. The company, which hasn’t turned a profit, lost $93 million in the first quarter of 2021 and $235 million in fiscal 2020.
The company warned of its indebtedness in the listing documents. As of early April, it had $826 million in debt, which it plans to pay down using the IPO proceeds.”
Soho doesn’t particularly focus on profit, which is evident in its lack of one. However, the business still needs to survive and thrive, and the IPO will allow it to keep up the steady rate of growth and continue expanding. Soho restaurants are far less exclusive than the clubs and more financially accessible, so the expansion of Soho restaurants around the world is a smart move in a post-COVID era when people are contracting their spending habits.
Soho club members get first crack at the IPO, but soon the public will have their first chance to buy into the vaunted Soho brand.