Fitness First sparks fresh talk of an IPO

FITNESS FIRST, the gym chain owned by BC Partners, is understood to be adopting international accounting methods in a move that could position it for a £1.2bn flotation.

Fitness First’s 2009/10 accounts will be prepared in line with international financial reporting standards (IFRS), the format used by publicly listed companies. The news will prompt renewed speculation of an initial public offering (IPO) for the business next year.

In June, industry sources said BC Partners was examining the option of a listing in Hong Kong, Sydney, Singapore or Shanghai in 2011. Although the plans remain at an early stage and BC Partners could decide to exit the investment via a sale, the Far East would be natural fundraising territory for Fitness First. A third of its revenues and more than half its earnings come from Asia.

The firm raised revenues nine per cent to £670.3m and increased underlying earnings 7.5 per cent £145m in the year to 31 October 2009, according to accounts. It could be worth up to £1.2bn in an IPO although only a quarter would be floated to reduce the company’s £550m bank debt.

BC Partners, which has an 81 per cent stake, would be expected to keep a majority holding.

Fitness First already has experience as a public entity. It was set up by entrepreneurs Mike Balfour and Christopher Pearce in Bournemouth in 1992 before being floated on the Alternative Investment Market four years later. Cinven took the leisure group private for £400m in 2001, selling it to BC Partners for an enterprise value of £835m in 2005.