Princess Diana's favourite gym sold for £16m

Chelsea's Harbour Club, the exclusive gym that was frequented by the late Princess Diana, has been sold for £16m to Next Generation, the leisure group founded by David Lloyd's son Scott.

The acquisition of an existing club is a first for Next Generation, which is owned by the Lloyd family, the Irish entrepreneurs John Magnier, JP McManus and Dermot Desmond, the racehorse owner Michael Tabor and the brewer Scottish & Newcastle. It has so far built up a 13-strong estate of racquet sports centres from scratch and has five more in development.

Scott Lloyd said: "We are only interested in developing high quality racquet sports and health clubs, so in this sub-sector of the market there are few acquisition opportunities. The Harbour Club was a unique opportunity for us to purchase the most prestigious family health and fitness club in central London."

Cannons, the health club chain, put the Harbour Club, located next to Chelsea Harbour, up for sale earlier this year. It had earnings of £2.4m last year, has 6,800 members and is known for its upmarket membership and treatments. Its former medical director, Dr Tim Evans, a yoga, acupuncture and aromatherapy specialist, was appointed as physician to the Queen last year. "The high profile of the Harbour Club will be a benefit to the business. We are not going to change the brand," Mr Lloyd said.

The Harbour Club will be paid for in cash from Next Generation's existing capital facilities, but it also announced yesterday that it had secured a new £104m bank facility. Investment in the business, including the Harbour Club purchase, amounts to more than £150m. The Harbour Club follows the opening of Next Generation's Hatfield site last month, one of the largest racquet and fitness centres in Europe.

Mr Lloyd said the group would consider floating on the Stock Exchange.