Brazil’s SmartFit IPO generates high demand; competitor BlueFit planning to go public
RIO DE JANEIRO, BRAZIL – In an IPO highly demanded by investors, SmartFit priced its initial public offering yesterday (12), introducing the first gym network to the Brazilian stock market, valued at just over R$13 (US$2.5) billion.
The company set a price per share of R$23, in an indicative range of R$20 to R$25, and collected R$2.3 billion in the base offering, according to two sources – if the coordinating banks exercise the additional option, another R$345 million may be collected. The offer is all primary, with resources to cash.
The company felt the strong impact of the pandemic on results, but managers worked with a scenario of a “normalized” balance sheet before and after the crisis. The company was valued at 15 times projected Ebitda for 2022, but the multiple considered normalized points to seven times Ebitda.
“From that perspective, it’s not that expensive. It’s priced close to the big retailers because it has national brand strength that few have, as in the case of Renner and Arezzo,” said one executive.
Competitor BlueFit, which plans to go public in October and has already launched a “roadshow”, is interested in using SmartFit’s excess demand in its favor. The company has met with about 40 funds in recent weeks. BlueFit recently raised about US$50 million from an equity fund and is looking to capitalize and grow its locations – it recently passed one hundred clubs (SmartFit has more than 800).
Bluefit is the second-largest Brazilian chain, but the gap to SmartFit is so large that many managers see it as a possible takeover target for the market leader. One of the partners would be interested in leaving the operation to run another Circuit Gym business, a source said.
“SmartFit is growing a lot with organic investments without needing M&A because it is killing the small gyms in Brazilian neighborhoods without having to buy them,” said one executive, citing that the company buys equipment for 30% to 35% less than small gyms on average because of their market power. Small competitors can’t compete with that.
The company, founded by Edgard Corona, bought JustFit this year and signed a letter of intent with Mexico-based Sports World. SmartFit attracted just over 100 institutional investors in the offering, with significant foreign participation – including shareholder funds from U.S.-based Planet Fitness.
Neither a dispute with minority shareholders involving a small company in the chain, nor controversy over the founder – Corona is embroiled in a Fake News investigation at the Brazilian Supreme Court – affected investor appetite. Itaú BBA, Morgan Stanley, BTG Pactual, Santander, and ABC Brasil coordinated the offering.
Live Market IntelligenceBrazil — Live Market Board
Rio Times · Live Market Intelligence
Brazil — Live Market Board
+0.47%
177,999.00
+0.47%
66,935.53
-0.58%
11,016.85
-0.13%
3,291,323
-0.41%
2,392.10
+2.12%
57,890.85
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| Instrument | Last | Change | YoY | Prev. | High | Low | Volume |
|---|---|---|---|---|---|---|---|
| IBOV | 177,999.00 | +0.47% | +33.76% | 177,158.86 | — | — | — |
| USD/BRL | 5.07 | -0.01% | -8.98% | 5.08 | 5.08 | 5.07 | — |
| SELIC | 14.25% | — | — | — | — | — | |
| PETR4 | 43.42 | +1.35% | +33.03% | 42.84 | 43.55 | 42.86 | 24,945,600 |
| VALE3 | 76.28 | +0.25% | +42.69% | 76.09 | 76.93 | 75.24 | 17,342,700 |
| ITUB4 | 42.89 | +0.35% | +25.64% | 42.74 | 42.89 | — | — |
| BBDC4 | 18.43 | +0.22% | +18.67% | 18.39 | 18.72 | 18.43 | 25,195,900 |
| BBAS3 | 21.35 | +0.76% | +8.38% | 21.19 | 21.35 | — | — |
| B3SA3 | 15.73 | +0.64% | +25.04% | 15.63 | 15.90 | 15.52 | 24,489,800 |
| ABEV3 | 15.99 | +0.19% | +28.33% | 15.96 | 16.10 | 15.85 | 38,246,000 |
| WEGE3 | 47.20 | +0.81% | +27.19% | 46.82 | 47.77 | 46.91 | 5,151,500 |
| PRIO3 | 60.85 | +1.48% | +44.23% | 59.96 | 61.08 | 59.82 | 7,176,700 |
| SUZB3 | 43.32 | +1.38% | -16.93% | 42.73 | 43.32 | — | — |
| RENT3 | 37.61 | -1.62% | +8.61% | 38.23 | 39.00 | 37.60 | 4,734,900 |
| AZZA3 | 16.42 | +3.53% | -53.98% | 15.86 | 16.49 | 15.89 | 1,833,000 |
| CSNA3 | 4.84 | -2.22% | -39.65% | 4.95 | 4.92 | 4.75 | 10,330,800 |
| GGBR4 | 24.98 | +0.00% | +48.34% | 24.98 | 25.33 | 24.98 | 5,788,500 |
| ENEV3 | 26.31 | +0.61% | +95.61% | 26.15 | 26.54 | 25.97 | 7,688,000 |
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