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KRIS HUNDLEYVenture capitalists make an $8-million investment in Lifestyle Family Fitness, which plans new locations with the money.
A St. Petersburg health club chain is receiving a major infusion of venture capital funding.
Lifestyle Family Fitness has closed on an $8-million investment in a deal led by Ballast Point Venture Partners of St. Petersburg and including Burton Partnership and Quantum Capital Partners, both of Tampa. It is the fifth-largest venture capital investment in Florida this year.
The venture capital will finance major expansion for Lifestyle, which started in a converted dance studio in Lakeland 22 years ago but only embarked on a growth plan in 2000. The chain, which was founded and is run by Australian Geoffrey Dyer, received an initial venture investment of $6.25-million four years ago from Quantum Capital. At the time, Lifestyle had six locations.
"That investment returned big dividends over the last four years because it allowed us to invest in people," said Dyer, Lifestyle's chief executive. "It also gave us an opportunity to grow."
Lifestyle now has 19 locations, primarily in central and southwest Florida. With all centers company-owned, Lifestyle has 1,100 employees who work with more than 80,000 members. With the additional funding, Dyer expects to add five to 10 new locations each year, with initial emphasis on the Tampa Bay area, as well as Orlando and Jacksonville. The company recently hired a former vice president of development with Winn-Dixie Stores to help identify potential new and conversion sites.
Lifestyle, which charges monthly memberships ranging from $38 to $44, had revenues last year of more than $26-million. Dyer expects sales will exceed $35-million for 2004.
Though health clubs might be considered less cutting-edge investments than high-tech, Dyer said, venture investors were fairly receptive to his pitch.
"The investment community is well aware the country is facing an obesity crisis," he said. "And the fitness industry has been able to maintain positive growth over the past 15 years, in good economic times as well as slow ones. It offers a great return on investment for the individual as well as investors."
Drew Graham, managing partner with Ballast Point Ventures, will join Lifestyle's board. He said his fund, which has made four deals in the past year, none with technology companies, was impressed by the company's management and performance.
"It's not so different from any retail-oriented business where you open units over time," Graham said. "The key is how good are the economics on each unit. And Lifestyle has done a very good job of getting a nice return."
Graham is also encouraged by the market's response to a competing regional health club chain, Life Time Fitness of Eden Prairie, Minn., which went public in March.
"It was one of the most successful IPO's in the first quarter," Graham said of the company whose shares first sold at $18.50 each and were trading Tuesday at over $23 per share. "Our anticipation is that there would be some more successful public offerings in this category."
Kris Hundley can be reached at 727 892-2996 or hundley@sptimes.com