Mercapital bets on fitness

Mercapital Servicios Financieros, the Madrid-based private equity house, has committed E150m to an expansion plan for Spanish fitness chain Grupo MSC Wellness. The funding is part of a finance package which gives Mercapital an initial 32 per cent stake in the company. The deal is structured to increase the group's interest in the business to 48 per cent over the next five years.

Grupo MSC Wellness, based in Catalunya, currently operates two large fitness centres in Barcelona and Seville under the Metropolis Sports Club brand. Mercapital has backed the Grupo MSC as the company aims to position itself amongst the market leaders in the Spanish health and fitness sector.  

The financing will be used to open up to 30 fitness centres in Spain’s major cities. As a first step, Grupo MSC plans to open two more centres in Madrid and Girona over the next six months. 'The investment will be made over the next five years, with the majority coming in the first three years,' says Miguel Zurita, partner at Mercapital.

The firm is hoping that MSC Wellness will be a major consolidator in the Spanish health and fitness sector. '98 per cent of Spanish fitness clubs are single entities. As well as building new centres, we aim to acquire the best clubs already operating across Spain,' adds Zurita.

Mercapital’s investment was made from its Mercapital Spanish Private Equity Fund II, which completed a E600m fundraising in December 2000. Investments from the current fund include a E40m commitment to Spanish textiles firm Grupo KA and a E37m investment in hygiene products business Jofel in February 2001. According to Zurita, the firm is close to a fifth acquisition, Bodegas Lan, first announced in July. A sixth transaction, is also expected to close before the end of the year.

Health and fitness has been one of the most active sectors for European private equity firms in 2002, both in terms of growth capital investments, divestments and public-to-privates. Nordic Capital recently acquired the Scandinavian assets of US operator 24 Hour Fitness Worldwide. In the UK, Royal Bank Private Equity-owned Cannons recently agreed a £205m price to take upmarket fitness chain Holmes Place private, although Cannons has abandoned its original offer citing poor performance by Holmes Place.