David Lloyd Leisure owner TDR Capital close to finalising £2bn 'sale'
Sky News has learnt that TDR Capital, which has owned David Lloyd Leisure since 2013, is putting the finishing touches to a so-called continuation vehicle which effectively transfers ownership of the group from one of its funds to another entity which has many of the same investors.
Banking sources said that TDR had lined up a string of major new investors to help fund the £800m of equity commitments required to finance the deal.
The remaining £1.2bn is in the form of David Lloyd Leisure's existing debt rolling over to the continuation vehicle.
One banking source said on Tuesday that there had been over £1bn of demand for the equity portion of the transaction.
David Lloyd Leisure is one of Europe's biggest health and fitness operators, with 134 clubs and more than 11,500 employees.
Under TDR's ownership, it has expanded its site numbers by 50pc, including opening 30 venues in mainland Europe.
In its last financial year, it recorded earnings before interest, tax, depreciation and amortisation of just over £230m - a one-third rise on the previous year.
The chain now boasts more than 800,000 members, as of last month.
People close to the company said its investment in spas and the introduction of popular wellness concepts such as meditation, yoga and tai chi have been partly responsible for its improved performance.
They added that it had a strong pipeline of new clubs both in the UK and Europe, with 30 new openings planned in the coming years, and proposals to open more than 200 Padel courts across its sites.
The decision to transfer ownership of David Lloyd Leisure to a continuation vehicle would allow new and existing investors the opportunity to benefit from future growth, according to insiders.
It also offers limited partners, or investors, in the TDR fund in which David Lloyd Leisure is currently held the opportunity to realise their investment.
TDR, which also owns Asda and Stonegate Group, Britain's biggest pub company, has explored a sale of David Lloyd Leisure in the past, including recently, but did not attract offers of a sufficient value, according to bankers.
Jefferies is advising TDR on the continuation vehicle - which has become an increasingly common way for private equity firms to resolve issues relating to the ownership of long-held assets - and its negotiations with investors.
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