Viva Leisure raises $30m to pump up as gym junkies return in droves

As gym junkies return in droves to its centres, Viva Leisure (ASX: VVA) has announced a $30 million capital raising to roll out new locations and refurbish recently acquired sites.

The national fitness centre operator is back in full swing with all sites open following the COVID lockdowns, and CEO Harry Konstantinou says visitations are now back to pre-pandemic levels.

It's given the company the confidence to continue pursue expansion following its acquisition of Australian Fitness Management (AFM), the master franchisor of the Plus Fitness brand, in August.

That deal has given it a presence in New Zealand for the first time and significantly bolstered the company's footprint of fitness centres.

At the end of FY20, Viva Leisure operated 70 locations in NSW, Victoria and Queensland with the bulk of the assets in the ACT where the company is based. Viva currently has 89 locations, together with the 200 franchised clubs in the Plus Fitness group.

As part of the acquisition of AFM, Viva Leisure is in the process of finalising the establishment of a New Zealand presence to manage the existing franchisee relationships, grow the franchisee network with the sale of additional territories. It is also seeking to establish company owned locations under the Plus Fitness and other Viva Leisure brands which include Club Lime.

The $30 million in fresh capital will be applied to pursue the expansion program as well as to refurbish newly acquired operations.

The fully underwritten share placement is being offered issue is being offered to institutional investors at $2.90 per share a 4.3 per cent discount to yesterday's closing price of $3.03.

Viva Leisure, which was founded by Harry Konstantinou, saw revenue increase to 30 per cent to $40.3 million in FY20, but net profit slumped to a $6.2 million loss due to a surge in depreciation expenses.

The company reported today that all members were off COVID suspensions. There were 6,175 members on requested suspension, down from 15,000 in September.

Revenues in October were also higher than pre-COVID shutdown levels.

Viva Leisure also has achieved record memberships totalling 103,000 in its company owned centres, along with the 175,000 Plus Fitness network members.

The group expects to open more than 20 locations by the end of this financial year, and it already has secured leases for 19 of them. It plans to have more than 400 locations by 2025.