- POSTED: 28 Apr 2014 17:36
- UPDATED: 28 Apr 2014 23:49
Fitness First will invest more than US$140 million to expand in Asia over the next five years.
SINGAPORE: Fitness First will invest more than US$140 million (about S$180 million) to expand in Asia over the next five years.
This announcement is the most significant to come from the fitness chain, after it pulled a US$500 million initial public offering (IPO) in Singapore in 2011.
Fitness First has since come under new ownership and new management. Its chief executive Andy Cosslett said a listing is not something on the plate at the moment.
Over the next five years, the firm is aiming to increase memberships by almost two-thirds to more than 350,000.
Fitness First said it is bullish about its prospects in Asia, and that is because less than 5 per cent of the region's population are members of a gym club, compared with a third in mature markets like the US.
Under its new majority owner -- private equity investor Oaktree Capital -- Fitness First said it has a strong balance sheet and war chest to invest in expansion, but this also means the company is not in a rush to list.
Mr Cosslett said: "It's far too early. We have 350 clubs around the world that we need to renovate; we want to get the Asia growth story really well locked in, which means we want to open 50 clubs over the next five years, so we've got a long way to go. At some point we'll start considering the future options but it isn't today, frankly."
Analysts said private equity owners like Oaktree typically seek to exit their investments within five years, which could mean that it is looking to beef up the business and the Fitness First brand before another IPO attempt.
This will allow Fitness First to get a higher valuation when it decides to list.
Jack Wang, partner at Lexico Advisory, said: "It's a good business, and it has a good brand in Asia, particularly in emerging markets. So I guess they need to build further in Asia before they consider an IPO at a higher valuation.
“With the new private equity investment, it would take away the pressure on the debt side, which was actually put in place by the previous private equity owners."
Previous owner BC Capital bought Fitness First for US$1.4 billion in 2005.
It had to sell its stake to distressed debt specialist Oaktree after it failed to float the business and repay debt obligations.
Fitness First, headquartered in the UK, is the largest privately owned health club group in the world.
It made US$212.3 million in the latest financial year ending October 2013, its earnings growing by 9.8 per cent year-on-year.