TDR Capital considers £2.3bn continuation fund for David Lloyd gym chain
TDR Capital considers £2.3bn continuation fund for David Lloyd gym chain
The move underscores the challenges private equity firms face in exiting consumer-facing investments amid subdued IPO markets. A listing is not currently viable, and TDR may also explore a sale to a larger private equity group.
TDR has attempted to sell David Lloyd multiple times, including in 2017 and 2023, but failed to secure a deal. While the business reported a 33% increase in adjusted EBITDA to £231m in 2024 and grew membership by 4%, some investors view its positioning as unclear. It sits between budget gym chains and premium brands like Third Space.
TDR acquired David Lloyd in 2013, investing £190m in equity and leveraging £528.5m in debt. By mid-2021, it had extracted over £550m in dividends and repayments—nearly tripling its investment. However, David Lloyd now carries £1.2bn in debt, including a £319.4m payment-in-kind loan that accrues over time instead of requiring interest payments.
Despite debt concerns, David Lloyd continues investing in its “premiumisation” strategy, spending £46m in 2023 to enhance club offerings, including new spa retreats. The company has expanded to more than 130 clubs across the UK and Europe, up from 90 at the time of TDR’s acquisition.
As TDR evaluates its options, the firm must navigate investor sentiment and the broader challenges of private equity exits in a sluggish deal environment.
Source: Financial Times
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