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Thursday, Jun 8, 2023

Leonard Green-Backed PureGym Weighs IPO

The United Kingdom’s largest gym chain, backed by Sawtelle-based private equity firm Leonard Green & Partners, is considering an IPO as it looks to muscle into the United States.

“We’re exploring our options,” a spokeswoman with Leeds-based PureGym Group said. “It’s too early to say if this is what we’ll do.”

The initial public offering disclosure was first made this summer in a bondholder update filed by PureGym in the United Kingdom, the spokeswoman said.

“The PureGym Group is in the early stages of considering options for potentially raising equity, including potentially in the public markets,” the filing said.

That listing could come this year as Pure-Gym angles to open a dozen more gyms in the United Kingdom this year, three “trial sites” in the United States by early 2022, and accelerate franchise partnerships in the Middle East and Saudi Arabia.

“The PureGym Group believes it is well positioned to take advantage of post-pandemic recovery, increased interest in activity, health and well-being, and the opportunities presented by competition having been weakened by the (rigors) of the last 18 months,” according to the filing.

PureGym management is working closely with Leonard Green & Partners to review its strategic options.

A Leonard Green spokesman declined to comment on where PureGym and the private equity firm are in the review process.

In November 2017, Leonard Green & Partners bought PureGym from New York-based private equity firm CCMP Capital Advisors in a deal valued at roughly $825 million. That deal came a year after PureGym scuttled plans to go public on the London Stock Exchange.

CCMP bought PureGym in 2013 for an undisclosed amount. Under its ownership, CCMP bought rival gym chain LA Fitness and its 43 clubs in 2015.

PureGym, which was founded in 2009, runs 506 gyms across the United Kingdom, Denmark and Switzerland, according to its fiscal 2021 second quarter financial report.

The company is seeing membership growth returning to normal as business restrictions are lifted.

Total group membership as of Aug. 15 was 94% of the total 1.7 million level seen in December 2019, according to filings made this summer. “This performance represents a significant step up from March 2021,” the bondholder update filing stated.

Total membership had recovered to 1.6 million as of Aug. 15 — which represents 94% of the December 2019 level — and 81% seen in March. That’s more than double what the membership was at the time Leonard Green bought PureGym.

Leonard Green has experience in the fitness business.  
It bought Life Time Fitness Inc. in 2015 alongside San Francisco-based investment company TPG Capital in a deal valued at $4 billion.

PureGym has hired investment bank advisers to explore fundraising options, including the possible IPO, to help pay for new gyms and lower debt.

Many gyms were forced to shutter starting in March 2020 due to pandemic restrictions. Leonard Green is hopeful that the reopening of its gym business in the United Kingdom takes hold.

PureGym said in its second-quarter financial report that the company was losing $687,850 in U.S. dollars a day during the first quarter when gyms were closed.  

“The PureGym Group is recovering quickly after a shockingly challenging first quarter when all our gyms were closed,” Humphrey Cobbold, PureGym chief executive, said in a statement. 

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