PureGym works out on IPO to fund global expansion

PureGym, the UK’s largest gym chain, has appointed advisers to work on a potential initial public offering to back global expansion as it taps the post-pandemic interest in fitness.

The company said that all of its 506 gyms were now open in the UK, Denmark and Switzerland, with relatively few restrictions on members, which meant that revenues were almost back to levels before the pandemic.

As a result of the rapid bounce back in demand, the company is returning to pre-pandemic growth plans, aiming to open more than 50 sites a year and expand into areas such as the Middle East, Asia and the US.

In a financial update to bondholders on Thursday, the company said it was studying capital raising options to take advantage of these growth opportunities as well as to reduce its borrowing. PureGym had £810 million (€945 million) in net debt at the end of the quarter.

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Group membership

Earnings before interest, taxes, depreciation and amortisation, adjusted to include rents, reached £16 million for the second quarter and £8 million in June alone. Total group membership was 1.6 million on August 15th, 94 per cent of levels in December 2019 before the pandemic hit the business.

Cobbold said the company had lost between £100 million-£150 million during the pandemic, which given earnings of about £132 million in 2019 meant that “it just wiped out cash and profitability for an entire year”.

The chain was supported with a £100 million equity injection by its majority owner Leonard Green, the US private equity group, and also took advantage of government Covid support schemes and deferred rents at many sites.

As much as £30 million of deferred rents still need to be repaid, Cobbold said, with the company in talks with landlords about returning the money over time.

- Copyright The Financial Times Limited 2021