Health City International BV

03 August 2005

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Investors

Waterland Private Equity Fund II BV has provided E12m of expansion capital for Health City International BV. The investor took a 30% stake with the management holding the balance of 70%, the capital being invested from Waterland's second fund that is now 50% invested and allocated. Fitness is a focus sector for Waterland, this deal being proactively sourced by the group, and investing in Health City is a response to growing health awareness and increasing demand for high-level individual sports and recreational opportunities. The fundraising process completed on 21 June 2005, with no pending authority approval, and took 3-4 months to complete with negotiations starting in March. Waterland expects the company to fundraise again within the year.Commenting on the deal, Rob Thielen, Waterland's founder and principal, predicts structural growth in the fitness market. 'The Dutch are Europe's number one when it comes to fitness. Currently, 9% of the population, or approximately 1.5 million people, make regular use of fitness centres. Participation elsewhere in Europe is around 7%. As a result of increased health awareness, I expect double-digit growth in the coming years. The population's ageing will be an important growth factor. Seniors, not really interested in strength or endurance sports, will want to continue working on a healthy physique. Health City's high quality and wide range of facilities should allow for +10% annual growth. It's market position is strong, one indicator being its member loyalty, which is amongst the highest in the sector.'

Company

Two Dutch athletes, RenÃ© Moos and Eric Wilborts, as well as Dennis Aarts, who has an entrepreneurial sports family background, founded Health City in 2000. In five years the company has grown to 14 locations in the Netherlands, with 35,000 members and employing 400 people. Moos sees continued strong growth, commenting 'Before the end of 2006, Health City's membership will grow from 35,000 to 100,000.' Reasons for this include changes to the Dutch governments policy, 'The current policy to only allow corporate fitness tax deductions during working hours should be amended. If companies, seeing the importance of healthy employees, provide reimbursement of membership fees, this should be tax deductible regardless of the timing of fitness events.' Waterland expects to exit to a pan-European fitness company once a certain degree of market consolidation has been achieved.

People