Bridges sells The Gym Group to Phoenix

Ellie Pullen
14 June 2013

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Bridges Ventures has sold a majority stake in The Gym Group to Phoenix Equity Partners, realising a 3.7x money multiple and a 50% IRR.

The leveraged deal is understood to have a value of £90-100m, with a fresh equity injection of £50m, as confirmed by Phoenix. A debt package was provided by HSBC and Proventus.

Phoenix is believed to have acquired a stake sitting somewhere between 51-70%. Bridges, which invested in The Gym via its Sustainable Growth I and II vehicles, has retained a 25% stake in the business to keep benefiting from the company's growth.

The transaction will allow The Gym to begin an ambitious expansion scheme, with a plan to open 20 to 30 new gyms per year, according to Bridges.

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.

Company
The Gym was founded in 2007 as an incubated start-up by Bridges and the business's current CEO, John Treharne. Its flagship gym opened in Hounslow the following year and the company went on to open a further 35 sites across the UK with 71 staff employed.

The Gym now boasts a membership base of 200,000 customers. It acts as a "no-frills", 24-hour gym with limited staffing and an absence of additional facilities, such as saunas and steam rooms, both of which are implemented to keep costs low.

The company's EBITDA is understood to stand at more than £10m on an annualised basis.

People
Bridges co-founder and managing partner Philip Newborough will remain on The Gym's board. Newborough, Anne-Marie Harris and Ian Taylor led the transaction for Bridges.

David Burns and James Thomas, both partners at Phoenix, will join The Gym's board of directors. John Treharne is The Gym's CEO, while Paul Gilbert is the company's chairman.

Advisers
Aquirer – DC Advisory, Henry Wells (Corporate finance); Eversheds, James Trevis (Legal); Travers Smith, Russell Warren (Tax); Ernst & Young, Cary Wilson (Financial due diligence); Intuitus, Ian Mackay (IT due diligence); Lincoln International, Jonathan Broome (Debt advisory).
Company – McQueen, George Fleet, Simon Croft-Baker (Corporate finance); Addleshaw Goddard, Mike Hinchliffe (Legal); PwC, David Trunkfield (Commercial due diligence); KPMG, Philip Abram (Financial due diligence); Wyvern Partners, Martin Kitcatt (Management due diligence).