Unlock the Editor’s Digest free of charge
Roula Khalaf, Editor of the FT, selects her favorite tales on this weekly publication.
The personal fairness backer of upmarket gymnasium chain David Lloyd has appointed bankers to look at choices for the group that embrace promoting the enterprise to itself, after earlier stalled makes an attempt to dump it.
TDR Capital has chosen bankers at Jefferies to assist it discover transferring its stake in David Lloyd from one TDR fund to a brand new one, whereas additionally bringing in new buyers, in line with individuals accustomed to the matter.
Such a transaction may worth the enterprise at between £1.8bn and £2.3bn, the individuals stated, cautioning that the agency, which additionally co-owns British grocery store Asda, had not but taken any selections.
TDR’s exploration of a so-called continuation fund for David Lloyd underlines the difficulties that some massive consumer-facing belongings are posing for his or her personal fairness homeowners within the face of subdued preliminary public providing markets.
A list of the enterprise was not at current an possibility as a result of “the IPO markets are closed”, one of many individuals stated, including that TDR may additionally strive promoting the chain to an even bigger personal fairness group.
The agency, which purchased David Lloyd in 2013, labored with bankers on probably promoting the enterprise in 2017 and in addition thought-about a sale final 12 months, in line with an individual with information of the enterprise, however no sale occurred on both event.
The enterprise reported a 33 per cent progress in its adjusted earnings earlier than curiosity, tax, depreciation and amortisation within the 12 months to December 2024, to £231mn. It grew its member depend by 4 per cent that 12 months.
However one retail targeted banker not concerned within the course of stated that regardless of good efficiency, David Lloyd had misplaced some enchantment to potential patrons resulting from a “bifurcation” of the market, saying it couldn’t be classed as a funds gymnasium, nor as high-end as some opponents together with London chain Third House.
An individual accustomed to the enterprise stated there was an “concern” over how TDR would exit it, as a result of “the belongings within the UK are simply not attractive”, including, “who desires to be a purchaser of the UK’s greatest leisure centre?”
TDR purchased David Lloyd in 2013 utilizing £190mn from its fund and £528.5mn in debt. By mid-2021 the agency had recouped greater than £550mn in dividends and different repayments, nearly thrice its preliminary funding.
That was paid for partly by loading recent debt on to David Lloyd, which now owes £1.2bn. That features a £319.4mn payment-in-kind mortgage that the corporate took on as a part of a refinancing, the stability of which grows over time as a substitute of the borrower paying curiosity.
David Lloyd has been engaged on what it calls a “premiumisation” of its golf equipment, together with rolling out new spa retreats at present websites. The corporate spent £46mn on “funding and innovation” in 2023.
David Lloyd operates greater than 130 golf equipment, largely within the UK and in addition in mainland Europe, up from 90 when TDR acquired the group.
TDR, David Lloyd and Jefferies declined to remark.
Extra reporting by Arash Massoudi
