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The private equity backer of upmarket gym chain David Lloyd has appointed bankers to examine options for the group that include selling the business to itself, after previous stalled attempts to offload it.
TDR Capital has chosen bankers at Jefferies to help it explore transferring its stake in David Lloyd from one TDR fund to a new one, while also bringing in new investors, according to people familiar with the matter.
Such a transaction could value the business at between £1.8bn and £2.3bn, the people said, cautioning that the firm, which also co-owns British supermarket Asda, had not yet taken any decisions.
TDR’s exploration of a so-called continuation fund for David Lloyd underlines the difficulties that some large consumer-facing assets are posing for their private equity owners in the face of subdued initial public offering markets.
A listing of the business was not at present an option because “the IPO markets are closed”, one of the people said, adding that TDR could also try selling the chain to a bigger private equity group.
The firm, which bought David Lloyd in 2013, worked with bankers on potentially selling the business in 2017 and also considered a sale last year, according to a person with knowledge of the business, but no sale happened on either occasion.
The business reported a 33 per cent growth in its adjusted earnings before interest, tax, depreciation and amortisation in the year to December 2024, to £231mn. It grew its member count by 4 per cent that year.
But one retail focused banker not involved in the process said that despite good performance, David Lloyd had lost some appeal to potential buyers due to a “bifurcation” of the market, saying it could not be classed as a budget gym, nor as high-end as some competitors including London chain Third Space.
A person familiar with the business said there was an “issue” over how TDR would exit it, because “the assets in the UK are just not sexy”, adding, “who wants to be a buyer of the UK’s best leisure centre?”
TDR bought David Lloyd in 2013 using £190mn from its fund and £528.5mn in debt. By mid-2021 the firm had recouped more than £550mn in dividends and other repayments, almost three times its initial investment.
That was paid for in part by loading fresh debt on to David Lloyd, which now owes £1.2bn. That includes a £319.4mn payment-in-kind loan that the company took on as part of a refinancing, the balance of which grows over time instead of the borrower paying interest.
David Lloyd has been working on what it calls a “premiumisation” of its clubs, including rolling out new spa retreats at existing sites. The company spent £46mn on “investment and innovation” in 2023.
David Lloyd operates more than 130 clubs, mostly in the UK and also in mainland Europe, up from 90 when TDR acquired the group.
TDR, David Lloyd and Jefferies declined to comment.
Additional reporting by Arash Massoudi
