Viva Leisure bulks up with a $30m raising

Listed gym and swimming pool operator Viva Leisure is planning to aggressively grow its market share.

Harry Konstantinou the CEO of Viva Leisure Limited pictured at one of the company's his gyms in Canberra.

Listed gym and swimming pool operator Viva Leisure is planning to aggressively grow its market share as the fitness centre sector languishes in the aftermath of national lockdowns.

It has launched a $30m equity raising to expand its locations by more than 400 per cent in just five years.

The fully underwritten equity raising was priced at $2.90 a share, a 4.3 per cent discount on the Thursday’s trading price of $3.03, with 10.3 million new shares to be issued. The company said with all of its 91 locations now open for business, increased revenue of $80.4m and just 6175 of its 278,000 members on requested suspensions, the time was right to expand.

“With the majority of gym operators observed to be performing well post-opening-up following the COVID-19-induced shutdown, this represents a significant opportunity,” the company told the ASX.

The move follows Viva Leisure’s acquisition of Australian Fitness Management, the master franchisor of Plus Fitness, for $20m in July.

Viva Leisure said it had identified a number of Plus Fitness franchisees that it would buy out for a total of $9m-$10m to convert to corporate-owned locations.

Additionally, the company said it would open up more than 20 new locations for its Club Lime, hiit republic and Groundup centres by the end of the financial year, with 19 leases already executed.

Beyond the current financial year the company said it would acquire new locations from a pipeline of “single club operators” and “large established health club groups” at an anticipated purchase price of three times ­EBITDA.

In addition to the raising, the ambitious growth project will be funded by a recent increase of the company’s debt facility with the Commonwealth Bank from $14.55m to $35.5m as well as $4m cash.

Despite trumpeting its ambitious plan to shareholders, Viva Leisure told the market that chief executive and major shareholder Harry Konstantinou would not participate in the raising. “Major shareholders, SHJA Management Pty Ltd (entities associated with Harry and Angelo Konstantinou) are not participating in the offer to provide flexibility to introduce new institutional shareholders to the Viva Leisure share register and further improve liquidity,” the company said.