Puregym plans a float in London as customers flood back after lockdown

Puregym plans a float session in London as customers come back to get fit after lockdown

Puregym is weighing a listing on the London stock market as it looks set to attract customers looking to get fit after the lockdown.

A listing of Puregym, which is owned by US private equity firm Leonard Green, would be an example of an acquisition company running a UK company rather than taking it off the stock market.

London-listed companies, including Meggitt, Ultra Electronics and Morrisons, are in the crosshairs of private equity firms after a record year so far for acquisitions.

Puregym, owned by US private equity firm Leonard Green, weighs a listing on the London Stock Exchange

Puregym, owned by US private equity firm Leonard Green, weighs a listing on the London Stock Exchange

Private equity firms are notorious for listing companies that are laden with debt. Past victims have included Debenhams and the AA.

And Puregym, which made a loss of £92.1m in the six months to June, is in debt of £810m, including £7m in government-backed Covid loans.

Chief executive Humphrey Cobbold admitted the pandemic was ‘shockingly challenging’ for Puregym – especially in the first quarter of this year, when gyms were closed due to lockdown and the company lost more than £500,000 every day.

He added: “Obviously we have quite a debt-laden balance sheet at the moment.

“So I don’t think it’s a surprise that we’re considering capital increase options.”

But Puregym, which specializes in no-nonsense sites and affordable memberships, said it recovered well now that the sites were allowed to reopen.

Membership levels are at 94 percent of the pre-pandemic total, up from 81 percent at the end of March.

While lockdowns temporarily halted operations for the chain, it took the opportunity to take over sites – aided by a £100m cash injection from its private equity owners.

It opened 15 gyms in the first half of 2021, bringing the total in the UK, Denmark and Switzerland to 506, and plans to open a further dozen in Britain by the end of the year.

Cobbold said weaknesses in the retail sector due to online shopping, and in the office market due to working from home, allowed Puregym to take advantage of cheaper rents.

The budget chain, which has some 1.6 million members, added that it “aimed for accelerated expansion in 2022.”

It aims to expand to the Middle East, Asia and the US, and its first franchise partner – the Saudi Arabian leisure investor Al Hokair Group – will open four branches before the end of the year.

Leonard Green, based in Los Angeles, bought Puregym in 2017 for around £600 million. Morgan Stanley and Barclays will act as lead advisors on the capital increase.