Mark Wahlberg-backed fitness chain F45 goes public
The Mark Wahlberg-backed fitness group F45 Training scored a valuation of more than $1.4bn on Wednesday as it sold shares to the public for the first time, offering investors a bet on whether consumers would return to the gym after the coronavirus pandemic.
The fitness franchisee, which has grown to more than 1,500 sports clubs that offer high intensity interval and circuit training, raised $300m in the initial public offering as it sold its stock at $16 a share. A shareholder of the company also raised $25m as they sold part of their stake in the business. The Austin-based business had initially marketed its shares to investors at prices between $15 and $17 a share.
The company’s flotation follows a fallow year for the health and fitness industry. Industry group the International Health, Racquet & Sportsclub Association estimated 17 per cent of gyms in the US closed in 2020, with big brands such as SoulCycle shutting some studios permanently. The owner of New York Sports Club filed for bankruptcy.
That pain was reflected in F45’s business, which reported an 11 per cent decline in revenue in 2020 while its losses doubled to $25m, according to its filing with the US Securities and Exchange Commission. The boutique-fitness chain’s debut on the NYSE comes more than eight months after it ended a special purpose acquisition company merger with Crescent Acquisition Corp, which had originally valued F45 at $845m.
F45’s filing suggested that once its gyms reopened, consumers were quick to return: of the 618 franchise studios that have been open the longest since temporarily closing, the median revenue per club was above pre-pandemic levels, it said. More than 1,400 of its studios have reopened.
“We believe our performance over the course of the pandemic has underscored the resilience of our business model,” the company said. “Despite challenges posed by the Covid-19 pandemic such as temporary closure of our studios, we successfully continued to sell new franchises and open new studios during 2020.”
Wahlberg invested in the group in 2019 alongside the family office FOD Capital and the company said it had also signed up the athlete David Beckham and model Cindy Crawford to help promote its brand.
F45 said it would use the capital to pay off some of its debts as well as to purchase assets from Flywheel Sports, the boutique indoor-cycling chain that shut down last year.
According to Landon Luxembourg, analyst at research group ThirdBridge, the fate of fitness franchises such as F45 depended on the scale of employees’ return to the office following the pandemic, which could determine the use of the gym versus relying on high-end, stay-at-home options, such as Pelaton.
“It’s all going to depend on work from home and how employers are going to slowly reapproach that,” he said. “Even with personal experience, a lot of employers are very much leaning towards a hybrid model.”
F45’s listing comes at the same time as the workout-apparel brand Fabletics, backed by actress Kate Hudson, tapped banks to plan its own flotation that it hopes will raise $500m, according to people briefed on the matter. The subscription-based athletic wear brand, controlled by TechStyle Fashion Group, said it had seen a more than 20 per cent increase in revenue in 2020 over the previous year, following a trend disclosed by competitors such as Lululemon, whose revenues also grew by double-digits over the same period.