Bridgepoint, Permira sell Holmes Place UK clubs

The two European buyout groups have taken a partial exit on their investment in Holmes Place, a European fitness chain, selling the UK business to rival Virgin Active.

Bridgepoint and Permira, two European buyout firms, have sold the UK business of fitness group Holmes Place to rival gym chain Virgin Active, in a deal which values the enlarged group at £650 million.

The two private equity firms will retain a minority stake in the merged group of between 12 and 15 percent, according to a source familiar with the deal, with the prospect of a public offering for the group imminent.

The two buyout groups backed a £210 million buyout and delisting of Holmes Place in May 2003 and continue to be majority owners of the Holmes Place European businesses which include health and fitness clubs in Germany, Austria and Switzerland.

A source said the European clubs would be run as a standalone business.

New Boathouse Capital and Close Brothers advised Virgin Active.  SJ Berwin provided legal advice for Bridgepoint and Permira.  KPMG acted as accounting advisers to all groups.

UBS and Rand Merchant Bank will provide the European and South African financing facilities respectively.

The Holmes Place clubs will be rebranded as Virgin Active by the end of second quarter 2007.  Completion is subject to approval by the Office Fair of Trading.

The deal is Bridgepoint’s second involving Virgin Active in under a year. Until October last year it owned a 55 percent stake in the fitness business which it sold back to Virgin Group for £134.5 million, netting investors a threefold return on their original investment.

Bridgepoint originally acquired the stake in Virgin Active in February 2002 for £110 million, investing from its Bridgepoint Europe II fund.