 "Snap Fitness")
Bangalore-based Snap Fitness India, the Indian master franchisee of Minneapolis, US-based fitness chain Snap Fitness that operates round-the-clock, is looking at an initial public offering (IPO) after a year when it completes 100 centres across the country.
The company, which was planning to raise about $8-10 million from private equity (PE) investors for less than 30% equity, did not go for PE due to valuation mismatch, said CEO Vikram BM. PricewaterhouseCoopers (PwC) was working for the company in the proposed fund raising exercise.
Over the next year, Vikram said, Snap Fitness India will have more than 100 centres, of which about 30 would be company owned. "With 30 company owned stores, we could easily look at hitting the market," he said. In India, only Talwalkars Better Value Fitness Ltd is listed on the Bombay Stock Exchange. Meanwhile, Snap Fitness India's master franchisee Force Fitness may also look for a pre-IPO placement if it manages to get expected valuation.
Snap Fitness entered India in 2008 with its first centre in Bangalore. At present, there are about 50 Snap Fitness centres in India, of which 33 are located in Bangalore. The company is now plans to open centres in tier-I, tier-II and tier-III cities to take the number of total centres to 300 over the next three years. Of these, about 30 would be company owned. However, if the company gets external funding, they will open 100 company owned centres. While the company operates 24 hours a day, it may look at keeping centres in smaller cities closed at night.
Snap Fitness centres, in sizes of 3,000 sq ft, 4,000 sq ft and 5,000 sq ft, typically entail an investment of between Rs 1.2 crore and Rs 1.5 crore each. It follows a 'hub-and-spoke' model, where it will have one company-owned centre and close to four franchise-run locations built around that area. Over the next three years, the company and its franchises will spend about Rs 350 crore.
Its flagship stores earn about Rs 1.6 crore to Rs 1.8 crore annually, while about 50% of the earning goes to meet operational expenses.
The fitness industry in India is estimated to cross Rs 6,000 crore by 2015 while more than 95% of the sector is still unorganised. Organised brands like Talwalkers, Gold's Gym and Snap Fitness contribute the remaining.
