AppId is over the quota
AppId is over the quota
By Saeed Azhar and Victoria Thieberger
SINGAPORE/MELBOURNE | Tue Oct 11, 2011 10:09am BST
SINGAPORE/MELBOURNE (Reuters) - UK-based private equity firm BC Partners has not ruled out an initial public offering for the Australian and Asian operations of its Fitness First gym chain, even as it considers a sale that could fetch more than A$1 billion (634 million pounds), a source said.
A planned float in Singapore of Fitness First's regional business was pulled last week, but the owners could revisit the IPO option next year, the person with direct knowledge of the situation told Reuters.
The source said some parties have already approached BC Partners and the group is weighing both options -- a potential sale of the company or an IPO sometime in the first quarter next year.
BC Partners declined comment.
Banking sources said Rothschild was advising BC Partners on the sale of the business, which runs 165 gyms with more than 400,000 members in Australia and Asia.
The sources declined to be named because they were not authorised to talk to the media.
In August, private equity firm CVC bought a 51 percent stake in Richard Branson's Virgin Active health club chain with 254 clubs globally, for about 450 million pounds.
The global deal valued Virgin Active at 900 million pounds, or about eight times earnings.
That deal included four clubs in Australia, where the chain plans a rapid expansion.
A source close to CVC said the buyout firm would not be interested in buying individual Fitness First clubs in Australia and rebranding them as Virgin Active.
Only Australia's largest private equity firms would be able to tackle an asset of that size. Industry sources said of those large firms, Archer Capital, CHAMP Private Equity and Pacific Equity Partners were not interested in Fitness First.
The Australian Financial Review reported last week that the Fitness First chain, which it said could fetch over A$1 billion, would be attractive to other buyout firms.
But industry sources told Reuters it would be a tough deal for private equity as it was difficult to put a lot of leverage into the business because of gym equipment costs, leasehold liabilities and other issues.
Banking sources suggested a debt-to-equity ratio of around three times may be possible, below the usual four to five times that buyout firms prefer, and meaning a bigger cash cheque would be needed.
The gym revenues were also susceptible to non-payment of dues and a decline if members drop out during an economic downturn, they said.
(Editing by Anshuman Daga)
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