High-performing health club operator Viva Leisure is raising $20 million to acquire 13 more health clubs to continue its remarkable growth journey across eastern Australia.
Requesting a trading halt and releasing an update to the Australian Stock Exchange, Viva Leisure has revealed plans to buy the 13 successful FitnFast (FNF) health clubs in Sydney, Wollongong, Melbourne and Belconnen in the ACT.
Viva Leisure, the Canberra-based fitness and wellbeing group which has spread swiftly to NSW, Queensland and Victoria, will offer 7.5 million shares.
Offered for $2.65 each, the price represents a discount of 8 per cent on Viva Leisure’s last closing price on 29 November of $2.880. (The offering excludes the company’s existing major shareholder to introduce new institutional shareholders to the Viva Leisure share register.)
Beginning from 2010, the FNF clubs today are profitable, collectively providing revenue of almost $19.7 million in the 2019 financial year. They have a track record of quality, ensuring a smooth integration with the new owner.
Under Viva Leisure’s ownership and with synergies applied, FNF is forecast to grow by more than 30 per cent. The well-located facilities are a neat fit for Viva Leisure’s hub and spoke model, as are the demographics of FNF’s combined membership of 21,500, most of whom are in NSW. The acquisition is expected to be completed in March 2020.
Launching in January 2004 with one facility, Viva Leisure today operates 55 different business sites, the majority of which are health clubs under the Club Lime brand. It strives to give people affordable membership and access to health clubs 24 hours a day, seven days a week, free of ‘contract’ membership offers.
Already Viva Leisure has completed and integrated more than 10 separate acquisitions and is well prepared for the latest move forward in a highly fragmented market where 42 per cent of the operators are not part of a franchise or larger group. Viva Leisure is reaching into significantly under-serviced regional markets where the competition is limited, and existing operators lack access to capital.
As part of the expansion, equipment will be updated, facilities refurbished and sites rebranded.
Viva Leisure’s rapid growth will see more executive support coming into the management team, with human recourses, information technology, marketing, area managers, acquisition staff and other key personnel to help the company’s outstanding growth.
Chief Executive and Managing Director Harry Konstantinou says the latest acquisition will take Viva Leisure’s combined membership past 92,000, while growing its workforce to 800 people across 85 sites throughout eastern Australia.
“These acquisitions are in line with Viva Leisure’s expansion strategy,” Mr Konstantinou said. “The deal opens significant opportunities on a number of levels in addition to additional revenue of $18 million per annum. We can now implement Viva Leisure’s successful hub and spoke model and introduce boutique offerings such as hiit republic into new territory and markets.
“The increased membership base allows our team to drive revenue growth of new products via channel expansion, for example with our digital offerings. At the same time, we will continue to achieve efficiencies and remove duplication. I am excited by the opportunity to roll out the new Yogabar brand as a separate boutique offering,” Mr Konstantinou said.
By the end of the 2019-20 financial year, membership is forecast to reach 106,500 and the number of clubs is expected to total 95, as Viva Leisure continues connecting health and fitness to as many people as possible by providing affordable, accessible and awesome facilities within the reach of all.