VIRGIN Active is being recapitalised with funding from existing and new shareholders and will acquire Kauai owner The Real Foods Group to position itself into a broader wellness and nutrition group.
Existing Virgin Active shareholders, Luxembourg and JSE-listed Brait and Virgin Group, will invest £20.2 million (R408.8m) in the business.
In addition, members of an investor consortium in Real Foods will invest £18.2m and Titan Premier Investments, an investment vehicle of South African businessperson Christo Wiese, will invest £50m to become new shareholders in Virgin Active.
Gyms such as those operated by Virgin Active were hard hit through government restrictions during the Covid-19 pandemic in South Africa and the United Kingdom, but the facilities remain integral to many consumers wishing to be part of the broader global trend to better health and wellness.
Investment holding company Brait’s share price fell 6.03 percent to R4.05 on the JSE – the share price has fallen some 85 percent over three years.
“We can combine our skills to deliver a complete health offer around both fitness and nutrition so that our members can meet their health goals more successfully.
“This, alongside the additional investment in the business, positions Virgin Active strongly to deliver growth over the long term,” said newly appointed Virgin Active chief executive (CEO) Dean Kowarski.
Virgin Active also announced it would acquire The Real Foods Group for £28.6m, which, subject to conditions, is expected to be implemented in the second quarter.
The Real Foods Group nutrition assets will be combined with Virgin Active to create a wellness group.
Kowarski, appointed Virgin Active’s CEO on Friday, started Real Foods Group in 2013 and acquired the Kauai business in 2015 and has grown it into 204 stores from 100 stores.
Matthew Bucknall would step down as CEO, having previously announced his plan to retire 25 years after co-founding the business, but would remain an adviser to the board and non-executive director of Virgin Active Italy.
“It has long been our strategy to complete the virtuous circle of exercise, diet and health for all our members.
“Combining Virgin Active’s leadership in exercise experience with Real Foods’ expertise in nutrition creates a credible and compelling offer.
“Virgin Active is now ideally placed to support the evergrowing demand for healthier lifestyles in the country,” Bucknall said.
The new capital would be used to support the business’ ongoing recovery and to accelerate growth, including investing in existing physical spaces, developing new product and service offerings, embracing digital and cutting-edge technologies.
It will also be used to and pioneer innovations to improve customer experience and increase member engagement.
Mark Field, the managing director of Virgin Active South Africa, was appointed Group chief financial officer, a position he would fill once a new MD for Virgin Active South Africa has been appointed.
“The Covid-19 pandemic has accelerated people’s appetite to lead a healthier lifestyle, and consumer demand is forecast to rise for the foreseeable future, creating significant growth potential.
“To support this demand most effectively, both foundations of wellness – fitness and nutrition – need to be addressed,” Brait said.
Virgin Active is a global leader in the health club sector and has opened 230 clubs since it opened its first club in 1999.
In 2019, before the pandemic, Virgin Active delivered its best year with record earnings before interest tax depreciation and amortisation of £142m (R2.88bn).
Real Foods operates 204 sites under brands including Kauai and NÜ Health Café.
It has also been operating its storewithin-a-store concept throughout Virgin Active’s sites in South Africa for 18 years, in addition to standalone and franchised sites.
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