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Virgin Active owner gets in shape for stake sale

Virgin Active owner gets in shape for stake sale

Virgin Active has more than 40 sites in England The South African owner of Virgin Active is preparing to sell a stake in the health and fitness clubs chain four years after taking majority control of the business. Sky News has learnt that Johannesburg-listed Brait has hired Morgan Stanley, the investment bank, to seek a buyer for a minority shareholding in Virgin Active. City sources said that Brait was exploring a number of options, with the most likely outcome expected to involve a stake acquired by a long-term capital provider such as a pension fund or sovereign wealth fund. Sir Richard Branson maintains a stake in Virgin Active The valuation that would be attached to Virgin Active, which trades from 242 clubs around the world, was unclear on Friday. Morgan Stanley is understood to have begun sounding out prospective investors in recent weeks. Brait, which also owns the UK-based supermarket Iceland Foods and a minority position in the fashion retailer New Look, has a market value equivalent to about £336m. Its shares have slumped by more than 70% during the last 12 months amid concerns about the crisis which has engulfed its largest shareholder, the businessman Christo Wiese. Mr Wiese was the chairman of Steinhoff, the holding company behind retailers such as Poundland, Bensons for Beds and furniture chain Harveys, when it uncovered a huge accounting fraud. He owns roughly 36% of Brait, which has also suffered over the financial restructuring of New Look, which saw the majority of the company’s shares handed to its creditors earlier this year. Insiders said it was possible that Brait could pursue an alternative to selling a minority stake in Virgin Active. The investment holding company had been planning to list on the London Stock exchange but announced in 2017 that it was abandoning the plan for reasons including “the uncertainty introduced by the timing and form of Brexit”. Virgin Active has a strong presence in the UK and South Africa, as well as operations in markets including Italy and parts of Asia. In Brait’s financial results for 2018, the company said Virgin Active had seen a 30,000 increase in membership during the year, with a 1% rise in revenue to £587m. Earnings before interest, tax, depreciation and amortisation declined by 4% during the year to £137m. The company also said it had closed four UK sites during the year, with EBITDA in the British business up 25%, partly as a result of the reduction in the licence fee payable to Virgin Group. Brait acquired the business in 2015 for more than £680m from the private equity firm CVC Capital Partners and Sir Richard Branson’s Virgin Group. Sir Richard’s holding company retains a minority stake in the company. In 2017, Brait received £61m from the disposal of 14 UK sites to David Lloyd Leisure, one of its principals rivals in the British market, and its Iberian business to Holmes Place. The UK has seen rapid growth at the discount end of the health and fitness sector, with the likes of Pure Gym expanding rapidly in recent years. Brait, Virgin Active and Morgan Stanley all declined to comment.

Virgin Active owner gets in shape for stake sale

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