After a doomed spell under the ownership of Syrian investor Simon Halabi, Esporta is likely once again to find itself in private equity hands in the next few weeks. The 52-strong UK fitness chain is being sold by US investment bank Greenhill after slipping into bankruptcy last year.
US buyout firm KSL Capital Partners is reported to have submitted a bid for the chain, it has substantial experience in the leisure sector as the owner of Clubcorp, the world’s largest owner of private golf courses.
Advent International has been connected to the deal but 3i is understood not have made a bid, although it was named as a potential acquirer earlier on in the process.
Other contenders include private equity-backed trade players David Lloyd Leisure Group, owned by property firm London & Regional and private equity investor Bank of Scotland Corporate, and LA Fitness, a MidOcean Partners portfolio company. London & Regional also owns Next Generation clubs. LGV is believed to be interested too, through its Northern England-based portfolio fitness company Total Fitness.
Esporta is thought to be worth in the region of £200m but also has property worth about £250m. It is not known whether the business will be sold as one unit or whether stronger performing parts of the business will be hived off and sold to other fitness clubs.
Halabi paid £465m for Esporta in late 2006, completing the deal through a family trust advised by Buckingham Securities Holdings, a Halabi-owned property group. He blasted other bidders out of the water, reportedly offering vendor Duke Street Capital over £25m more for the business than any other bidder. Société Générale supplied a £330m senior and mezzanine debt package to support his bid.
A fall in sales and the departure of key members of the management team led to the collapse of the fitness chain.
Halabi was believed to be putting a bid together to re-acquire the company from administrators Grant Thornton in late 2007 but it seems he has now resigned himself to losing his £150m equity investment. It is not known how much Société Générale will be able to recover from the sale.