Bridges reaps £90m from heavy lifting at The Gym

The socially oriented UK investor has made almost 4x after selling down its stake in a UK low-cost gym operator.

Phoenix Equity Partners has bought a majority stake in low-cost gym operator The Gym from Bridges Ventures, in a deal that the latter said would generate a 50 percent internal rate of return.

Financial terms were not disclosed, but a source close to the deal said that Bridges, which specialises in socially orientated investing, sold a stake of about 50 percent in the business for somewhere between £90 million and £100 million. The firm said its return multiple from the deal was 3.7x, implying that its equity investment in the business was about £25 million. 

The Gym is a budget gym operator that operates predominantly in low-income areas. It now has 36 large purpose-built sites, which are open 24 hours a day and offer low-price flexible membership options, with the aim of attracting customers who would not have previously signed up to a gym membership.

Bridges has backed the business ever since inception in 2008, through its Sustainable Growth Fund, which looks to invest in companies that deliver both social impact and financial returns. The  firm previously told PEI that the investment chimed with two key aspects of its social mission: investing in under-served areas, and improving health and wellbeing. It said  today that more than half of The Gym's sites are situated in these under-served areas, while nearly a third of its 200,000 members have never been members of a gym before.

Bridges will retain a stake of about 25 percent in The Gym under the new structure, with managing partner Philip Newborough keeping his seat on the board.

The Gym plans to use the capital to fund further expansion: it is currently planning to roll out 20 to 30 new gyms per year. In a statement today, Phoenix said that it “looked forward to investing further capital to help [CEO John Treharne and his management team, who will stay on following the deal] take the business to the next level.”