Fund: Fund IV
Investment theme: Operational improvement
Investment date: August 2002
Exit date: November 2006
SATS Sports Club ("SATS") is the largest fitness
chain in the Nordic region with over 100 wholly-owned clubs in
Norway, Sweden, Denmark and Finland. SATS also has an additional
four franchise clubs.
SATS has almost 300,000 members (2011) that have
access to the different training services provided. The main
customer target group is 20-40 year olds living in the major cities
within the Nordic countries.
Customers purchase memberships for a minimum
subscription period of 12 months and either pay upfront (pre-paid
cards) or monthly via electronic funds transfer (EFT or
24H Fitness Worldwide ("24HFW"), a global fitness
chain, was seeking to divest all its non-United States operations
after some troublesome years in Europe and Asia. The purpose of the
sale was for 24HFW to become completely focused on the American
market and subsequently float the company on the stock market.
24HFW was, at the time of the acquisition of SATS, controlled by
McCown De Leeuw, a US based private equity firm. 24HFW was acquired
by Forstmann Little in Q2 2005.
Nordic Capital was approached in February 2002 by DnB
Markets, a Norwegian investment bank, concerning the potential
acquisition of 24HFW's Scandinavian operations. DnB Markets had
been retained by the original founders of SATS in Norway (Vegard
Liven, Björn Sigurd Johansen and Aksel Gresvig) who wanted to find
an equity partner to make a management buy-out of the SATS
In the strategic assessment of SATS, Nordic Capital
found the fitness industry to show fundamental growth drivers in
the medium to long term from which increased demand is expected.
This was emphasised by the fact that limited exercise was the
biggest health problem in Europe, there was an increasing demand to
place additional responsibility on the employer for health related
issues and there were additional tax incentives being
In this attractive market, Nordic Capital found SATS
to have a leading market position. Having been approached by the
management team and become their partner it was found that
comparable companies had significantly higher EV/EBITDA multiples
than what the company was acquired for.
At the time of Nordic Capital's acquisition, SATS had
experienced poor financial performance which gave it significant
profitability growth potential once a new and strong management
team with considerable fitness industry experience had been put in
Nordic Capital developed a detailed operational
improvement plan built upon four pillars: club portfolio
restructuring, establishing a standardised chain concept, ensuring
operational best practice and creating accelerated organic growth.
Furthermore, a number of potential add-on acquisitions were
During Nordic Capital Fund IV's period of ownership,
the operational improvement plan was well executed. Through these
initiatives, SATS enhanced its market position and emerged as the
only pan-Nordic fitness chain.
A number of operational initiatives were successfully
completed and during Fund IV's ownership, the EBITA margin improved
Nordic Capital quickly identified an experienced CEO
to run the business and he was in position immediately following
the acquisition. Nordic Capital was a regular partner to management
in on-going strategy discussions as well as in a number of smaller
In December 2006, Nordic Capital Fund IV entered into
a binding agreement to divest SATS to Tryg i Danmark smba. Tryg i
Danmark smba invests in companies within the health care and
security sector and is also the majority shareholder of the
TrygVesta insurance group.
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