Literacy Capital plc, a listed investment trust primarily focused on investing directly into private businesses based in the UK, has acquired a significant minority stake in leading high-end flex office provider, Cubo, to facilitate its continued UK expansion into all leading regional hubs by 2025.
Founded in 2020 by property investors Marc and Rebecca Brough, Cubo has established itself as the UK’s fastest growing provider of bespoke, high-end flex office and co-working space in the Midlands and Yorkshire, with sites in Birmingham, Leeds, Nottingham, Sheffield, and Derby.
Earlier this year, Cubo announced plans to almost double its footprint by the end of 2023. New sites in Manchester and Edinburgh are set to open in the coming months, alongside second sites in Nottingham and Birmingham, which are being brought forward due to demand exceeding capacity in these two cities. Workspaces in other leading regional towns and cities are also in the pipeline.
Cubo is aiming to transform the traditional serviced office model to enable increasingly intuitive ways of working. It provides an experience-led lifestyle offer to meet the changing needs of businesses.
Providing services from hot desking to a designated desk, private office, or entire floors on flexible terms, Cubo is rapidly becoming the location of choice for many SMEs, tech companies and blue-chip corporates looking for a world class environment.
The investment from Literacy Capital will support and catalyse Cubo’s ambitious expansion plans, which come at a time where the flex office market is experiencing unprecedented growth, with demand for serviced space growing by 25% in 2022 alone.
The transaction is Literacy’s 22nd platform investment since the inception of the fund in 2017 with Cubo joining an already impressive roster of portfolio companies, including Grayce, Oxygen Freejumping, Butternut Box and Antler Homes.
Commenting on the investment from Literacy Capital, Marc Brough, CEO of Cubo, said:
“We are committed to establishing a network of Cubo workspaces across the length and breadth of the UK. Our model of securing leases in prime locations across all the UK’s core cities is reaping massive benefits for our members with all our sites currently enjoying 98% occupancy.
“The opportunity to work with Literacy Capital will enable us to secure further sites quickly and fit-out in multiple locations simultaneously to meet the growing needs of both existing members and other corporate occupiers who have committed to work with Cubo as the business grows a nationwide platform.
“We look forward to capturing more of the market for hybrid working in 2023 and beyond.”
Richard Pindar, CEO of Literacy Capital added:
“Marc and his team have built a solid track record of investment in flexible office space and client relationships in just three years, which is a great foundation for long-term success in a rapidly growing market.
“Cubo is exactly the type of business we are looking to partner with, having executed its plan very well in regional cities which have been less well served by competitors. Cubo is also well positioned to double its footprint by the end of this year and progress plans further beyond this.
“We are delighted to be supporting Marc and the business on their continued rollout and look forward to supporting the company as growth is maintained and accelerated following our investment.”
Advisers on the deal were: Rigby & Co (Property Adviser); Brown J (Vendor Legal); Walker Morris (Vendor Property Legal); Deloitte (Corporate Finance); Marcussen (Tax); Addleshaw Goddard LLP (Investor Legal); Keystone (Investor); DSW (Investor Finance); GT (Vendor Finance).