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Invicta exit for Electra

Duke Street Capital’s acquisition of Invicta Leisure has provided Electra Investment Trust and RIT Capital Partners with an exit. Esporta Group, the vehicle Duke Street Capital set up for the recent public-to-private of Esporta, has bought the company for GBP140 million.

RIT Capital Partners (the successor to the Rothschild Investment Trust) initially backed Invicta, which was founded as a golf club business in 1990. Electra first invested in the company, which had moved into health and fitness, in 1996 when it committed development capital of GBP8 million. In total Electra committed GBP18 million in junior mezzanine to Invicta, which drew down the money as it expanded. Prior to the acquisition by Esporta, Electra held around a third of the company’s equity, RIT Capital Partners 45 per cent and management 20 per cent.

The merger with Esporta returns GBP41.2 million to Electra, GBP26.1 million in cash and GBP15.1 million in secured loan notes. According to Tim Syder, the Electra director responsible for Invicta, over six years the investment has generated an IRR in the late twenties. Of Electra’s proceeds, GBP11 million has been reinvested for a four per cent stake in the enlarged Esporta Group. RIT Capital Partners has also taken a five per cent stake in the new group. The balance of the cash has been used to reduce Electra’s bank borrowings. Electra has been winding down the investment trust since 1999, when it saw off 3i’s hostile takeover bid, repaying two-thirds of capital and reinvesting the rest.

Invicta sold its golf operations to Clubhaus for GBP12.2 million in 1999. It now operates eight racquet clubs and seven health and fitness under the brand Club Indigo. The facilities include both large, out of town multi-facility health and racquet clubs and smaller city centre fitness units. Four clubs have opened this year and there is a healthy pipeline of new clubs scheduled to open by the end of 2003.

The founder and CEO of Invicta, Kevin McCollum, who was previously employed by RIT, will become chief executive officer of Esporta. Michael Ball, finance director of Esporta, will take the same position at the enlarged company. Nick Irens remains non-executive chairman. The new Esporta group includes 18 racquet clubs and 42 health and fitness clubs with a total of 260,000 members.

Ashurst Morris Crisp advised the Invicta vendors and Royal Bank of Scotland, which arranged funding for Duke Street’s original Esporta acquisition. Clifford Chance and Hawkpoint Partners advised Duke Street Capital.