Virgin Active Limbers Up For £1.5bn Float

Virgin Active will take a big stride towards a stock market listing this month when it invites City advisers to pitch for a role on a flotation in South Africa.

Sky News has learnt that the health and fitness clubs group has convened a beauty parade of investment banks next week to work on the initial public offering which could value Virgin Active at up to £1.5bn.

The timing of a flotation has not yet been finalised, but sources said it was almost certain to take place on the Johannesburg Stock Exchange - reflecting the fast-growing nature of its African operations - rather than in London.

Virgin Active, which is 51%-owned by CVC Capital Partners, employs more than 12,000 people and operates 263 clubs in nine countries, including Australia, Italy, Namibia, Singapore and the UK,

In 2013, the last year for which results are publicly available, the company had 1.2m members, with revenue rising 5% to £653.1m and pre-tax profits up 10% to £125.4m.

Sources said that Virgin Active had had a successful 2014, with profits likely to have grown by a similar amount to the previous 12 months.

Sir Richard Branson's Virgin Group owns approximately 45% of the business, which was established in 1999, meaning that a £1.5bn price-tag would value the tycoon's stake at as much as £600m.

That would be welcome news for Sir Richard following tough competition in the UK which has seen Fitness First close a number of sites and LA Fitness, another rival, being put up for sale.

If it does float, Virgin Active would be the third venture part-owned by Sir Richard's holding company to sell shares publicly in a matter of months.

Last year, Virgin America, the domestic US airline, and Virgin Money, the UK bank which acquired the assets of Northern Rock from the Government, listed in New York and London respectively.

STJ Advisors, a firm which helps companies organise stock market flotations, was brought on board by Virgin Active during the first half of 2014.

Reports last year suggested that Virgin Active would consider an offering of shares to retail investors, although with a London listing now less likely, it is unclear whether that will form part of the company's plans.

Last month, Virgin Active appointed Simon Susman, a veteran of the South African corporate scene, as its new chairman, the clearest sign to date that an IPO would take place in Johannesburg.

Mr Susman, who also worked for Marks & Spencer in the UK, replaced Richard Baker, the former Boots boss who now chairs Whitbread.

Virgin Active and CVC declined to comment.