F45 Training moving towards New York Stock Exchange listing with potential US$1.5 billion valuation

Australian-founded fitness franchise F45 Training is moving towards a listing on the New York Stock Exchange with a potential valuation of more than US$1.5 billion in its initial public offering.

Now headquartered in Austin, Texas and with Hollywood star Mark Wahlberg as a shareholder, media reports suggest that the IPO will see an initial 20.3 million shares offered to the public at an expected US$15- to US$17-a-share price range to raise up to $345 million.

About 1.6 million shares in the IPO are being offered by the selling stockholder, the proceeds of which would not go to the company.

Founded in Sydney in 2013 in Australia now operates more than 2,500 studios franchises across in 63 countries.

It plans to primarily use its IPO proceeds to repay debt, grant employee bonuses and cover the upcoming acquisition of the Flywheel indoor-cycling chain’s assets, with remaining funds will go to general corporate purposes.

In 2019, Wahlberg and private equity fund FOD Capital led a private equity investment in F45 through MWIG, a private investment vehicle. According to the New York Stock Exchange filing, Wahlberg owns about 26% of MGIW.

F45 announced its plans to list on the US-based NASDAQ stock exchange in June 2020, after securing a deal with Crescent Acquisition Corporation (CAC), a special purpose acquisition company.

The two companies then terminated their agreement last October, with F45 Chief Executive Adam Gilchrist saying that approaching the public markets at the time "was not the right option for F45".

However, the company now advises “we believe there is a significant opportunity to meaningfully expand our franchise studio footprint in the United States.”

In the filing F45 Training explained that it plans to open up to 7,000 studios in the US and 23,000 globally, adding, in a statement "as of March 31, 2021, we had 941 franchises sold and 518 total studios in the US.

"Prior to the COVID-19 pandemic, we had seen the pace of our US growth accelerate with average net franchises sold per month increasing from 12 in 2017 to 18 in 2018 to 32 in 2019.

"Due to COVID-19, the average net franchises sold per month decreased in 2020 to 10.

"Based on current franchises sold in Australia per capita as of March 31, 2021, we believe there is long-term studio potential for us to open over 7,000 studios in the US.

"As of March 31, 2021, we had 630 franchises sold outside of our core markets of the United States and Australia. Based on an extrapolation of current franchises sold in Australia per capita as of March 31, 2021, we believe there is a long-term global opportunity for over 23,000 studios, with a potential for approximately 16,000 studios outside of the US market.

"We believe we can continue to grow our international presence through our existing franchising strategy and by opportunistically pursuing master franchising agreements to sell select territories to experienced, local partners."

The filing also offers an insight into the effects the COVID-19 pandemic and the subsequent lockdowns have had on international fitness operators like F45.

As of 31st March, the company had approximately 1,286 open studios, which represented 86 per cent of its total estate. The remaining 14% were located in regions that continue to face restrictions.

F45 saw revenues decrease to US$82.3 million for the year ended 31st December 2020 - compared to US$92.7 million at the end of 2019.

The F45 statement added “we believe our performance over the course of the pandemic has underscored the resilience of our business model.”