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Success for growth and impact investment opportunity The Gym Group
Investing for growth and impact is rapidly gaining momentum.
Impact investing is becoming a staple feature in many diversified portfolios, proving that some investors are looking for opportunities which have the potential to deliver more than just financial returns.
There is still some hesitancy when it comes to impact investing with some traditional investors not realising that it is possible to invest for superior returns in projects and businesses which also deliver social and environmental impact.
However, one recent IPO offers further proof that commercial growth, positive social and environmental impact, and financial returns can go hand-in-hand. Here's the story of The Gym Group (The Gym), which has successfully sold shares equivalent to 50% of the company via an offering on the London Stock Exchange. The company was valued at £250 million when it floated in November.
The Gym Group's story
The Gym was co-founded by health club entrepreneur, John Treharne and Bridges Ventures, a specialist fund manager dedicated to sustainable and impact investment in 2007. The company was originally incubated in-house in line with Bridges' focus on backing for-profit, sustainable companies that are helping to address major societal challenges in areas like health and well-being.
In 2014, The Gym Group was named UK National Champions in the European Business Awards. Click here to read the full story. In the same year, the company was also featured in the Sunday Times Fast Track 100 as one of the UK’s fastest growing companies and one of the best small companies to work for.
John Treharne - CEO.
Jonathan Spaven - Development Director
Richard Darwin - CFO
Paul Gilbert - Non-Executive Chairman
Impact themes: underserved markets and health and well-being.
The Gym pioneered the low-cost gym model in the UK.
As of 30 September 2015, The Gym had expanded to incorporate 66 sites across the UK
and now has around 363,000 members.
About a third of its members were not previously members of a gym.
Bridges sold a portion of its stake to Phoenix Equity Partners in 2013, to fund the next phase of The Gym’s growth
but has continued to be an active minority investor since Phoenix became the majority owner of The Gym in 2013.
November’s IPO – which values the business at £250m – means that Bridges’ investment in The Gym is now valued at almost 6x cost.
Alongside its commercial success, The Gym has shown a clear and demonstrable positive social impact in a number of areas:
Around two-thirds of The Gym's sites are located in underserved markets and one-third of users are first-timehealth and fitness club users. There are a number of factors which mean that The Gym has been able to open gym access up to an entirely new demographic, including its low price point, no-contract environment, and extended opening hours.
The Gym currently provides employment to around 200 full-time employees and contracts with more than 550 self-employed personal trainers.
Health and Well-being
Obesity and related illnesses are putting an extreme strain on the NHS. Although regular exercise can help tackle this growing problem, previously, many facilities were inaccessible or unaffordable to people on low incomes.
The Gym saw this gap in the market and stepped in to provide low cost health and fitness facilities in order to help combat the current epidemic.
Recently, The Gym has been working hard to minimise its carbon footprint and by investing in the latest technology and equipment it has been able to substantially reduce its electricity usage per user. The business is built on the belief that technology can change how we exercise.
"We’re proud of the positive social impact we’ve been able to achieve together since 2007 as the business has grown, and we look forward to this continuing in the coming years." - John Treharne, CEO of The Gym Group, speaking about the partnership between himself and Bridges Ventures.
“The Gym shows what can be achieved when impact-driven investors join forces with talented and visionary entrepreneurs. By focusing on how to address one of the biggest challenges in the health and well-being space, we were able to identify this sector as an opportunity. And by working with John, his talented team, and more recently Phoenix, we’ve been able to build a high-growth, high-impact business that has brought the benefits of gym membership to hundreds of thousands of people who have never been members of a gym before. So it’s a perfect illustration of Bridges’ core thesis: that positive social impact really can drive commercial success, and vice versa." - Philip Newborough, managing partner of Bridges.
With The Gym, Bridges Ventures has shown how successful impact investing can be, both financially and in terms of a positive societal impact, when done correctly. The disruptive, low-cost model pioneered by The Gym made exercise accessible to a previously underserved audience and brought in an excluded market.
Everything Bridges did with this company turned it into a compelling investment opportunity which has actually gone on to prove that superior returns are achieveable in this marketplace.
To find out more about investing for growth and impact, including how to invest for superior returns, download our free guide for retail investors.