Bannatyne limbers up for f lotation
GYM and health club chain The Bannatyne Group has revealed it could rekindle plans for a stock market flotation within the next few years as it limbers up for expansion into Europe.
Chief executive Justin Musgrove said an initial public offering (IPO) remains on the table for the firm, which is owned by Dragon’s Den star Duncan Bannatyne.
The chain had planned to raise £300million by floating in 2016, but later pulled the plug on the IPO amid tumultuous market conditions.
Mr Musgrove said while an IPO was not an immediate priority, he “can’t rule it out” as an option over the next three or four years. He said: “Duncan has always said it remains an opportunity for us.
“We have got some work to do and still have a lot of acquisitions to complete, but it’s very much an option that remains open,” he added.
In the meantime, the 71-strong chain is focusing on expanding further across the UK under aims to have around 100 clubs nationwide.
It completed four acquisitions in 2017, including its first club in Northern Ireland, and has more “careful” deals planned for 2018. It has its sights set on Europe further down the line.
Mr Musgrove said a European launch could be possible within the next five years, with the market on the Continent driven by the low-cost gym model and leaving a gap for Bannatyne’s affordable, premium offering.
He said its focus on this market has helped differentiate the chain in the UK and kept profits growing at a healthy clip despite stiff competition.
No-frills rivals are growing aggressively in the UK, with The Gym Group planning to add 20 sites this year.
“We had a dilemma three or four years ago when the low cost sector had polarised the market – the likes of Pure Gym created a vacuum in the market. We had a decision to take the group low cost or upmarket,” said Mr Musgrove. It has firmly focused on its niche, with a £50m investment drive to upgrade existing health clubs, add new spa facilities and expand through acquisition.
The decision has paid off, with the firm recently posting a 57 per cent surge in underlying pre-tax profits to £14.3m for 2017 thanks to record turnover of £117.6m as it increased its membership by 7.4 per cent to nearly 212,000. The 69-year-old entrepreneur still owns 99 per cent of the chain.