KPMG working on options for Quadrant’s gyms, AMart

Quadrant created the Fitness and Lifestyle Group around 2016 through a series of acquisitions. Picture: Gaye Gerard

Quadrant Private Equity’s Fitness and Lifestyle Group gyms business and AMart Furniture retailer are coming into focus.

DataRoom has learnt that before the pandemic hit in 2020, Quadrant was close to selling its AMart Furniture business to private equity firm Allegro Funds.

But after sales picked up during the pandemic, it is believed to have changed tack, and was planning to run a sale campaign. Now it is understood that advisory firm KPMG is working with AMart’s lenders, Deutsche Bank and Challenger, to assess options.

Quadrant hired investment bank Jefferies for AMart, as reported by DataRoom in September 2020, and had plans to sell the Barbeques Galore operation, which had earlier been on the market through Miles Advisory.

There was talk that Barbeques Galore would be subject to a management buyout, but it continues to be owned by Quadrant.

In 2019, AMart underwent a refinancing for about $300m of loans to financiers including Westpac and NAB. If investors in the fund that owns AMart are keen for an exit, one option for Quadrant could be to recapitalise the business and put it in a continuation fund, then offer some cash to investors. The same outcome is possible for its gyms business, which has about $1bn of debt. Earlier, a small part was sold to another operator.

Quadrant created the Fitness and Lifestyle Group around 2016 through a series of acquisitions.

It purchased the Goodlife Health Clubs from Ardent Leisure in 2016 for $260m, after the acquisition of Jetts Australia (reportedly for less than $100m), and Fitness First Australia from Oaktree Capital for no more than $300m.

The private equity firm lifted its performance through driving membership growth.

But sources say that across the gym industry, the recovery has not been as strong as expected.

During 2020, AMart, which has about 69 stores in Australia, generated about $60m in annual earnings before interest, tax, depreciation and amortisation.

Around 2017, the annual EBITDA was about $100m.

In 2016, when talk arose that AMart could be listed, the thinking was the business and Barbeques Galore could be worth about $600m.

AMart was founded by billionaire John van Lieshout, who cashed out by selling to private equity, and it has a major presence in Queensland.

Ironbridge purchased Super A-Mart in 2006 for $500m before Quadrant Private Equity became a co-owner.

In 2016, Quadrant bought a 25 per cent stake from Ironbridge and boosted performance through creating a larger scale that enabled it to buy more of its imported furniture from China and secure better discounts as a result.