Register
Login:
Share:
Email Facebook Twitter


Support Scott’s
Ride Across Britain
Challenge



Finance & Stock Market News


UPDATE 1-BC Partners could still float Fitness First-source

Tue, 11th Oct 2011 09:11


By Saeed Azhar and Victoria Thieberger

SINGAPORE/MELBOURNE Oct 11
(Reuters) - UK-based private equity firm BC Partners has not ruled out an initial public offering for the Australian and Asian operations of its Fitness First gym chain, even as it considers a sale that could fetch more than A$1 billion ($996 million), a source said.

A planned float in Singapore of Fitness First's regional business was pulled last week, but the owners could revisit the IPO option next year, the person with direct knowledge of the situation told Reuters.

The source said some parties have already approached BC Partners and the group is weighing both options -- a potential sale of the company or an IPO sometime in the first quarter next year.

BC Partners declined comment.

Banking sources said Rothschild was advising BC Partners on the sale of the business, which runs 165 gyms with more than 400,000 members in Australia and Asia.

The sources declined to be named because they were not authorised to talk to the media.

In August, private equity firm CVC bought a 51 percent stake in Richard Branson's Virgin Active health club chain with 254 clubs globally, for about 450 million pounds ($705 million).

The global deal valued Virgin Active at 900 million pounds, or about eight times earnings.

That deal included four clubs in Australia, where the chain plans a rapid expansion.

A source close to CVC said the buyout firm would not be interested in buying individual Fitness First clubs in Australia and rebranding them as Virgin Active.

Only Australia's largest private equity firms would be able to tackle an asset of that size. Industry sources said of those large firms, Archer Capital, CHAMP Private Equity and Pacific Equity Partners were not interested in Fitness First.

The Australian Financial Review reported last week that the Fitness First chain, which it said could fetch over A$1 billion, would be attractive to other buyout firms.

But industry sources told Reuters it would be a tough deal for private equity as it was difficult to put a lot of leverage into the business because of gym equipment costs, leasehold liabilities and other issues.

Banking sources suggested a debt-to-equity ratio of around three times may be possible, below the usual four to five times that buyout firms prefer, and meaning a bigger cash cheque would be needed.

The gym revenues were also susceptible to non-payment of dues and a decline if members drop out during an economic downturn, they said.

($1 = 0.638 British Pounds)



(Editing by Anshuman Daga) Keywords: FITNESS FIRST/

(victoria.thieberger@thomsonreuters.com)(+61 3 9286 1421)(Reuters Messaging: victoria.thieberger.reuters.com@reuters.net)

COPYRIGHT
Copyright Thomson Reuters 2011. All rights reserved.
The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.



Next Article: BoE'S Miles-Gilt purchases could bring down corporate debt costs

Back to Finance News


Sign up for Live Prices
Home  |  Contact Us  |  About Us  |  Careers  |  Advertise with Us  |  Sitemap  |  Terms & Conditions  |  Cookies  |  Privacy


Datafeed and UK data supplied by NBTrader and Digital Look. While London South East do their best to maintain the high quality of the information displayed on this site,
we cannot be held responsible for any loss due to incorrect information found here. All information is provided free of charge, 'as-is', and you use it at your own risk.
The contents of all 'Chat' messages should not be construed as advice and represent the opinions of the authors, not those of London South East Limited, or its affiliates.
London South East does not authorise or approve this content, and reserves the right to remove items at its discretion.