Target Overview

Viva Gym, a prominent low-cost gym operator in Spain, has successfully acquired Fitness Hut, a key player in the Portuguese fitness market. This strategic merger positions the combined entity as the largest low-cost gym group in the Iberian Peninsula, boasting a membership base of nearly 200,000 individuals across 48 locations and generating revenues exceeding €50 million. Both brands are committed to providing affordable health and fitness solutions, with plans for significant expansion in the near future.

Industry Overview in Spain and Portugal

The health and fitness sector in both Spain and Portugal is experiencing robust growth, particularly within the low-cost gym segment, which is currently the fastest-growing area of the market. As public awareness of health and fitness continues to rise, low-cost gyms are effectively meeting the demand for accessible and affordable exercise facilities. The combined group of Viva Gym and Fitness Hut aims to leverage this growing trend, offering premium services without the burden of extended contracts.

Moreover, according to the World Health Organisation, physical inactivity poses a significant public health risk, contributing to approximately 3.2 million deaths annually on a global scale. By improving access to affordable fitness facilities, the merged group aims to play a vital role in addressing this issue, particularly for low-income populations who often find traditional gym memberships out of reach.

With fitness participation steadily increasing in both nations, the low-cost gym model has attracted a diverse demographic, leading to a surge in new gym memberships. The shared vision of Viva Gym and Fitness Hut aligns with the ongoing trend towards healthier lifestyles among the Iberian population, setting a strong foundation for future growth.

Rationale Behind the Deal

This acquisition is driven by a clear objective: to enhance the accessibility of fitness options in Iberia. By merging operations and resources, the combined entity is set to accelerate its growth trajectory. Management anticipates adding a minimum of 14 additional gym locations in 2018, aspiring to expand to over 90 venues by the end of 2020. The strategy is underpinned by a commitment to creating a 'best-in-class' operator that continues to innovate within the low-cost sector.

Investor Information

The acquisition is spearheaded by Bridges Fund Management, a specialist in sustainable and impact investing. Bridges holds a majority stake in Viva Gym and has a proven track record in the low-cost fitness sector through previous ventures, including the launch of The Gym Group in the UK and investments in Impact Fitness in North America. This expertise positions Bridges ideally to support the combined group's growth strategy, leveraging deep industry knowledge to navigate the evolving fitness landscape.

In addition to Bridges, the deal involves co-investments from significant partners, including Magenta Partners and Hermes GPE, all of whom remain dedicated to the operational success of the new entity. Alternative lender Ares Management has also provided vital acquisition financing, ensuring the group has access to the capital necessary for its ambitious expansion plans.

View of Dealert

The Join forces between Viva Gym and Fitness Hut presents a formidable opportunity for the low-cost gym sector in Iberia. As the largest group of its kind in the region, the combined entity stands to benefit from economies of scale, increased market presence, and enhanced brand recognition. This merger not only adds value to the shareholders but also promises to deliver better health outcomes for the community at large by promoting fitness access.

Furthermore, the strategic foresight demonstrated by Bridges Fund Management and its partners indicates a well-considered approach to the growth of this sector. The management team’s commitment to maintaining a 'premium low-cost' value proposition ensures that both brands can compete effectively against traditional high-cost gyms while appealing to a broader demographic.

Given the rising demand for affordable health and fitness options in both Spain and Portugal, this merger is addressed at a timely juncture. The consolidation allows the brands to pool resources and expertise, ultimately sharpening their competitive edge and streamlining operations.

In conclusion, the merger of Viva Gym and Fitness Hut is poised to be a success, strengthening each brand's market positioning and significantly expanding their reach. This venture aligns perfectly with the increasing societal need for accessibility in fitness, marking it as a commendable investment in both health and business terms.

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