Branson says Virgin Active will soon be fit for £1bn sale

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Sir Richard Branson is planning to float his Virgin Active fitness centres in a move that could see the 167-strong chain valued at £1bn.

Virgin Active, which added 72 sites through its acquisition of Holmes Place a year ago, has begun a beauty parade of investment banks to carry out the initial public offering.

The business, 85 per cent owned by Sir Richard, has been highly successful. Accounts for 2006, which include just two months of trading of the enlarged group, show sales up 34 per cent to £206.3m and profits before interest, tax and other charges ahead 14 per cent to £50.8m.

It is believed profits have doubled since the merger with Holmes Place. Private equity firms Permira and Bridgepoint Capital both have a minority stake in Virgin due to their previous ownership of Holmes Place. It is understood that Sir Richard will retain a significant stake in the company.

The company's largest membership is in South Africa, but Italy and Spain are also growing markets. Overall, the group has around 900,000 members.

Meanwhile, Virgin Atlantic will this week announce it is ditching plans for an exclusively business- class airline to run from New York to London, Paris and Milan. Paul Charles, director of communications at the airline, said starting up the new venture "would be too risky" due to uncertainty over the future of the open-skies agreement between Europe and the US. "There is a real likelihood that open skies will be reversed in 2010," Mr Charles said.

Instead, Virgin is making plans to increase the number of Upper Class seats and double the number of seats in Premium Economy, its business-class service. "This would mean hundreds more seats going into the market," Mr Charles said.