Brait SE, the South African investment house, looks set to pay $1 billion for an 80% controlling stake in fitness chain Virgin Active, providing owners CVC Capital and Virgin Group full and partial exits, respectively. According to Reuters, the deal gives Virgin Active an enterprise value of £1.3 billion, including debt.
Virgin Active as 1.3 million members worldwide and reportedly generated about 630 million pounds in revenues in 2014. South Africa is home to the largest number of gyms owned by Virgin Active, which has a total of 267 locations in 9 countries. The deal will allow the company to expand its presence further, tapping the expected demand from the increasingly health-conscious middle classes, particularly in Africa and Asia.
CVC Capital is exiting its 51% stake entirely, more than doubling its investment, sources tell the Financial Times. The private equity group had been considering a public market listing for Virgin Active before deciding to sell to Brait. Between them, Virgin Group and company management will retain a 20% stake in the company. The acquisition will be financed from Brait’s cash reserves, bolstered by the sale of retailer Pepkor for $2.4 billion in the latter part of 2014.
Advisors on the deal include Linklaters for Brait; Allen & Overy for Virgin Active; Gibson, Dunn & Crutcher for management shareholders; and Slaughter and May for Virgin Group and CVC Capital.
The deal is expected to close by midyear, subject to approvals from the South African and Namibian competition authorities