Soho House IPO Lifts Velvet Rope On Members-Only Investment Opportunities

Exclusivity — online and offline, in house and globally — is the selling point of one U.K. company filing in the U.S. to go public.

To that end, Membership Collective Group, a global membership platform of physical and digital spaces — where the portfolio includes 28 Soho Houses, nine Soho Works, The Ned in London, Scorpios Beach Club in Mykonos, Soho Home and other offerings — has filed with the Securities and Exchange Commission for a listing.

As Reuters noted, the S-1 filing used a “placeholder” figure of $100 million, where there are no further details on the size of the offering or when it might take place. But as the newswire noted, the company raised $100 million for a roughly 5 percent stake — with a valuation of about $2 billion implied by that capital raise.

The firm said in the SEC filing that it “began with the opening of the first Soho House in 1995 and remain the only company to have scaled a private membership platform with a global presence.” Through the past 25 years the company has boosted its membership expertise and diversified our offerings — both physically and digitally.

“We have observed a secular shift in the ways that people live and work—with less time spent in traditional corporate offices and more time in social spaces that encourage creativity and mutual engagement,” according to the S-1.

The company said that as of the beginning of April, there are more than 119,000 members, with 111,300 Soho House members, tied to the company’s channels overall.

A Secular Shift

At a high level, the company said, “We have observed a secular shift in the ways that people live and work — with less time spent in traditional corporate offices and more time in social spaces that encourage creativity and mutual engagement … The membership of each House is assembled by a select committee of influential creatives and innovators that represent the local area in which the membership is founded.”

The filing reveals that the bulk of the business comes from Soho House, and that this staple of the portfolio has retention rates averaging 94 percent between fiscal 2016 and 2020.

“Our membership has remained resilient through multiple economic cycles and the COVID-19 pandemic. When our physical sites were forced to close as a result of the COVID-19 pandemic, there was minimal impact on the retention of Soho House members, with the Soho House Member Retention rate remaining at 92%,” said the company.

To get a sense of how the platform has spurred demand for private memberships, Membership Collective Group said its wait list has 48,000 members.

As Membership Collective Group said, the total membership roster through the past few years has come in at 16 percent annually, as measured by a compound annual growth rate, while membership revenues have grown by 24 percent.

The current annual membership for US House stands at $3,400 — and for its physical locations that are based in major cities, the company stated, “we target stabilized average revenues of $20 million to $30 million by the fifth year of operation.”

As for cross-pollination, the company estimated that “in 2019, there were over one million non-member guests who visited our Houses, many of whom visited frequently. Our intention is to continue to convert these customers into Soho Friends members.” Soho Friends do not have full access to the houses but pay an annual subscription cost of about 100 pounds.

For the fiscal year that ended in January, the company posted membership revenues of $176.9 million, up 5 percent year on year; in-house revenues reflected the impact of the pandemic, down 59 percent year on year. Along the same timeframe, operating loss widened to $154.7 million, from $58.9 million in the previous year.

“Nevertheless, we have continued to make significant investments in our membership platforms, including through our digital platforms and in new Houses,” the filing notes. “These efforts may prove more expensive than we currently anticipate, and we may not succeed in increasing our revenue from these investments or otherwise sufficiently offset these expenses.”

How much investors will pay up for members-only allure, but with losses in place, will remain to be seen.