Fitness First in £1.2bn IPO

BUYOUT house BC Partners is believed to be lining up Fitness First for a flotation in the Far East which could value the world’s largest gym group at between £1bn and £1.2bn.

BC Partners, which has enjoyed success with the initial public offerings (IPOs) of travel IT firm Amadeus and French care home operator Medica this year, is thought to be looking at a listing in either Singapore, Shanghai, Sydney or Hong Kong.

Fitness First had sales of £610m in the year to 31 October 2008, according to the most recently filed accounts at Companies House. The group generated ebitda of £134.9m and had net debt of £1.2bn. It is likely an IPO would be used to cut the company’s borrowing pile and reduce BC Partners’ stake in the business from its current level of 81 per cent.

Goldman Sachs, JPMorgan, Macquarie and UBS are understood to be among the investment banks briefed on the plans by BC Partners. Because Fitness First’s business is tilted to Asia-Pacific – more than a third of its revenues and more than half its earnings come from the region – it is thought investor appetite for an IPO on a local market would be stronger.

The move would mark a return to public ownership for Fitness First, albeit in a new geography. Entrepreneurs Mike Balfour and Christopher Pearce set up their first club in Bournemouth in 1992 before floating the outfit on London’s Alternative Investment Market (Aim) four years later. Private equity player Cinven took the company over in 2001 for £400m.

BC Partners bought Fitness First from Cinven at an enterprise value of £835m in 2005, vowing to help fuel the group’s international expansion.