Phoenix, Bridges reap healthy returns in £250m Gym Group IPO

Greg Gille
09 November 2015

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The Gym Group, a health club operator majority-owned by Phoenix Equity Partners, has listed on the London Stock Exchange in a ТЃ250m IPO.

The Gym listed at 195 pence per share, with the price rising to a high of 216 pence in the first few hours of conditional trading. Unconditional dealings are expected to take place on 12 November 2015.

The company itself raised £90m in proceeds from the offering, which gave it a market cap of around £250m.

Meanwhile, selling shareholders reaped a total of £35m. These include Phoenix and Bridges Ventures, alongside management and certain employees. The private equity backers will retain stakes of 28.1% and 13.9%, respectively, while management will hold a 6.9% stake.

Phoenix is understood to have generated a realised and unrealised return of 2.5x cost and 47% IRR following the IPO. Bridges, which had already realised a 3.7x money multiple and a 50% IRR when it sold the business to Phoenix in 2013, sees its remaining investment in the company valued at 5.8x cost.

Barclays and Numis Securities are acting as joint sponsors, joint global coordinators and joint bookrunners. Peel Hunt is acting as lead manager.

Previous funding
Bridges first invested £1m in The Gym in 2008 to finance the opening of the company's maiden site. The GP then led a £20m funding round for the business that saw HSBC provide a revolving credit facility.

Bridges sold a majority stake in the company to Phoenix in 2013. The leveraged deal was understood to have been valued at £90-100m, with a fresh equity injection of £50m, as confirmed by Phoenix at the time. A debt package was provided by HSBC and Proventus. Phoenix was believed to have acquired a stake of around 60%, while Bridges retained 25%.

Under Phoenix's majority ownership, the group saw revenues increase by around 43% to £45.5m, and adjusted EBITDA increase by 56% to £14.7m. The Gym also hired a new CFO, COO, property director and head of IT, according to a source close to the situation.

Company
Founded in 2007, The Gym is a UK-based operator of low-cost gyms with 363,000 members and 66 sites. The company focuses on providing health and fitness facilities at an affordable price in facilities open 24 hours a day, seven days a week.

People
David Burns represented Phoenix on the deal, while Philip Newborough oversaw the investment for Bridges. John Treharne is the founder and CEO of The Gym.