Quadrant continues roll-up strategy with Fitness First acquisition

Oaktree has owned the global Fitness First business since 2012 when it and fellow creditor Marathon Asset Management completed a debt-for-equity swap worth around GBP565 million ($733 million). They assumed control from BC Partners, which bought Fitness First from Cinven in 2005 for GBP835 million.

As early as 2011, when plans for an IPO in Singapore were abandoned, the possibility of carving up Fitness First's assets by geography came under consideration. It was reported earlier this year that Oaktree had appointed banks to assess a break-up of the business, which has more than 370 clubs and around one million members across the UK, mainland Europe and Asia Pacific.

Fitness First entered Australia in 2000 and is now ranked by Ibis World as the industry leader by revenue with 65 outlets and over 240,000 members. Only three companies - Fitness First, Ardent Leisure and Anytime Australia - enjoy a double-digit market share in the highly fragmented gym, fitness and health club industry, which generates around A$1.3 billion ($992 million) in revenue each year.

In August, Quadrant reached an agreement with Ardent to buy Goodlife Health Clubs - 76 locations and more than 200,000 members - and branded exercise concept Hypoxi for A$260 million. It followed up earlier this month with the acquisition of Jetts Fitness, a low-cost gym operator with 250 locations and 200,000 members globally, but primarily in Australia.

"Fitness First is very strong in New South Wales. Goodlife is strong in every state other than New South Wales. For the first time we've got a truly national player at scale that can deliver to its members a whole range of services," Chris Hadley, executive chairman of Quadrant, told The Australian Financial Review.

These newly acquired assets will be combined under the PE firm's fitness and lifestyle group, in which Oaktree will be a shareholder. The group's annual revenue will be in excess of A$400 million, generated by 224 directly-owned and 188 franchised outlets. Greg Oliver, former CEO of Goodlife, will take charge of operations.

Quadrant is currently investing its eighth fund, which closed at A$980 million in mid-August.

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• Topics
• Australasia
• Consumer
• Buyouts
• Trade sale
• Australia
• Quadrant Private Equity
• Oaktree Capital