CVC and Virgin Group today announce that Brait has agreed to acquire a controlling interest in Virgin Active, the leading international health club operator, in a transaction that puts an enterprise value on the business of c. £1.3 billion.
Virgin Active is the leading international global health club operator with over 1.3 million adult members and 267 clubs spanning nine countries and four continents. Its differentiated and flexible proposition, tailored to local demographics, has proven to be repeatable, successful and resilient.
Virgin Active has an outstanding business in the fast growing and under penetrated South African market, where it is the clear number one with 114 clubs (including one in Namibia). It offers its members a broad spectrum of health club options ranging from the high end, high touch, Classic Collection to the entry level Virgin Active Red format. Across the rest of its markets Virgin Active is the leading large format, full service health club chain focused on key metropolitan centres. It is the number one health club operator by revenue in the UK and Italy, and it has attractive positions in both Iberia and Australia. It has also started building a business in the fast growing Asian markets, having opened clubs in Singapore and Bangkok over the last two years.
Virgin Active has a consistently strong track record of delivering profitable growth. Over the ten years between 2004 and 2014 (which included the acquisitions of Esporta clubs in the UK and Spain and Holmes Place clubs in the UK), Virgin Active grew its revenue at a CAGR of 22 per cent and its underlying EBITDA at a CAGR of 20 per cent on a constant currency basis.
CVC will be selling all of its shareholding and Virgin Group will be selling part of its shareholding. The transaction is expected to complete over the summer, following which Brait will own 80% of Virgin Active and Virgin Group will retain 20%, excluding management. The existing management team will be retained, and will be reinvesting alongside Brait.
Brait's experience in long term investments globally, as well as in Virgin Active's biggest market, South Africa, fits with Virgin Active's aspirations for international growth in both emerging and developed markets, and will enable the company to accelerate its proven strategy.
Sir Richard Branson commented: "Virgin Active is a business that we are proud to have been associated with from the very beginning, over fifteen years' ago. While today's transaction is testament to the huge amount the business has already achieved, we believe that its future is more exciting. We are delighted that we will continue to play a part in this alongside Brait, another long term investor with a strong track record in growing businesses, and would like to thank CVC for their support of the business during their period of ownership."
John Gnodde, Chief Executive Officer of Brait South Africa, commented: "Virgin Active is a business that we have tracked for many years, and we welcome the opportunity to invest in the company, alongside one of the world's most renowned entrepreneurs. Virgin Active's long-tenured and experienced management team, most of whom have been part of the company since its founding, have delivered impressive performance throughout the company's history.
"Virgin Active's successful track record, high cash generation and exciting growth prospects in both emerging and developed markets make this an attractive opportunity for Brait and its shareholders. We look forward to being a part of Virgin Active's success over the long term."
Paul Woolf, Group Chief Executive of Virgin Active, added: "Virgin Active has grown to become the leading international health club operator, with strong positions in South Africa and Europe, as well as an exciting foundation for future growth in Asia Pacific.
"This transaction will enable us to accelerate our proven strategy of continuous improvement in our member proposition to deliver organic growth, and of opening clubs both in existing and new territories. We are delighted that Brait will become our lead investor, alongside our long-term shareholder, Virgin Group."
Pev Hooper, Partner at CVC, commented: "CVC have enjoyed a highly successful partnership with Virgin Group over the past three and a half years, working closely with Virgin Active's management to deliver a sustained period of international growth. The business is now well positioned to maximise the potential that exists globally, under its new ownership by Brait and Virgin."