Virgin Active eyes £1bn sale as an alternative to floating
VIRGIN ACTIVE, the gym chain owned by Sir Richard Branson, is considering a secondary private equity sale that could value the business at £1bn.
Virgin is known to have been considering an initial public offering (IPO) as a way of raising capital for growth for some time, but stockmarket turbulence has made that route less appealing. In the past couple of months, the company has instead engaged in serious discussions with buyout houses – thought to include Advent, Blackstone, CVC and KKR – with a view to selling between 30 and 40 per cent of the firm’s equity.
Virgin, which is being advised by Goldman Sachs and Citigroup, owns 70 per cent of Virgin Active. The remainder is held by management and private equity players Bridgepoint and Permira, a legacy of Virgin’s takeover of Holmes Place.
Virgin Active has 187 clubs and close to 1m members in Britain, Italy, Portugal, South Africa and Spain. Last year it generated earnings of £101m on sales of £391m.
The secondary buyout talks are at an early stage, but it is understood Virgin wants to raise cash to make acquisitions as many of its competitors have suffered difficult trading. While an IPO remains an option, a private equity sale is seen as a likelier option in current markets.