Virgin in £100m expansion of health club chain

Virgin Active, the chain of health and fitness clubs 90 per cent owned by Sir Richard Branson's Virgin empire, has raised £100m to fund its expansion programme.

The business already has 11 clubs in the UK as well as 80 in South Africa following a £27m acquisition in January. It hopes to use the funds to open 17 more centres in the UK with expansion into Europe planned.

The group has raised £30m of debt finance from Heller Financial, an American investment firm which will now have an option over 2.5 per cent of the equity. A further £70m in equity has been provided by Virgin Investments, Sir Richard Branson's investment vehicle.

Sir Richard said: "The completion of this financing will enable us to offer value for money to more people across the country and become one of the top players in the industry worldwide."

The first Virgin Active branch opened two years ago in Preston, followed by others in Leeds, Manchester, Northampton, Derby, Solihull and Nottingham. A further three will open in London early next year.

Virgin Active's clubs are large-scale centres covering 55,000 square feet. They feature gyms, swimming pools and restaurants as well as "family-friendly" facilities such as play areas and crèches. There is no joining fee with the typical membership costing £46 a month. Group turnover is planned to exceed £50m next year and break even in the first half of 2002. Virgin is aiming for a UK chain of 17-25 clubs with more possible in Europe.

There are no short-term plans for a stock market flotation, but a spokesman said it was "a possibility in the next two-and-a-half to three years".

Sir Richard Branson's Virgin group owns 90 per cent of the equity of Virgin Active. The remaining 10 per cent is held by the management.