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Stock market launch for Club Lime owner Viva Leisure reflects positive fitness industry performance
The opening of an initial public offering (IPO) this week for fitness club owner and operator Viva Leisure is being seen as a reflection of not only the Canberra-based business’ success and growth potential but also marks confidence in future prospects for the fitness industry.
As reported by the Australian Financial Review, the group, which has 24 facilities and more than 42,500 members, is seeking to raise fresh funds at six-to-seven times forecast earnings before interest, tax, depreciation and amortisation and 21-to-23-times forecast profit.
Stockbroker Ord Minnett started marketing for the company's IPO this week, booking funds to meet Viva Leisure management and calling for bids into the bookbuild (the process through which a company generates, captures and records investor demand when raising capital) by 22nd October.
Viva Leisure is seeking to raise $30 million in fresh funds to pursue growth ($20.5 million), repay related party debt ($3.5 million), allow shareholders to selldown ($4 million) and pay for the IPO ($2 million), according to documents in front of potential buyers.
While only a small IPO by Australian Stock Exchange (ASX) standards, Viva Leisure’s move is reflective of positive sentiment about the ongoing potential of the Australian fitness industry.
Potential investors have been told Australia's fitness industry will be worth $2.5 billion a year by 2023, representing 3.6% a year compound annual growth for 10-years leading into that date.
Linked to this is the potential for industry consolidation, with a reported 42% of the market made up of smaller independent gyms and local government owned facilities.
With Quadrant Private Equity's Fitness and Lifestyle Group occupying 27.5% of the market, Viva Leisure is part of the 42% market.
Formed in the ACT in 2004 with one facility, the Viva Leisure entity was created in 2016 to manage the assets and operations of The Club Group. It has two fitness club brands - Club Lime, a mixed gender health club, and Club Pink, the ladies-only health clubs - as well as the Gymmy PT personal training division.
It expects $31.3 million revenue and $7 million EBITDA in the 2019 financial year.
The AFR has speculated that other fitness groups may be considering floats or sales, highlighting Crunch Fitness, run in Australia by husband-and-wife team Selena Short and Lusiano Afeaki, and private equity-backed Next Gen Health & Lifestyle Clubs.
In addition, the AFR suggests that Quadrant, owner of the Fitness and Lifestyle Group - Australia's biggest gym owner, with Jetts Fitness, Goodlife Health Clubs, Fitness First and Snap Fitness among its brands - may, “like all private equity investors ... have one eye on the exit as it seeks to get the combined group running smoothly.”
21st September 2018 - VIVA Leisure group acquires Wagga Wagga’s Xceler8 24hr Fitness
5th September 2018 - Viva Leisure acquires South Canberra’s Elite Physique fitness club
7th August 2018 - Club Lime opens latest ACT club
2nd July 2018 - Club Lime to open new Googong facility
4th May 2018 - Club Lime opens 20th fitness club
12th March 2018 - Australian fitness industry revenues to grow to $2.4 billion by 2022/23
12th March 2018 - Club Lime to open four new facilities in 2018
5th March 2018 - New $20 million lifestyle and wellness facility opens in Canberra
19th August 2016 - Ardent Leisure sells Goodlife Health Clubs in $260 million deal
23rd February 2015 - Australian gym market to reach saturation within five years
17th December 2014 - Club Lime achieves industry first with ISO 9001:2008 Quality accreditation
4th December 2014 - Club Lime highlights $500,000 in annual community donations
5th November 2014 - Club Lime backs Diabetes ACT with $180,000 sponsorship
6th June 2014 - Club Lime fitness clubs named Canberra’s most trusted brand
3rd August 2010 - Crunch Fitness Set for first Australian opening
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