Golden Returns Boost Fitness

Investors are growing increasingly interested in fitness companies within their own regions, enticed by the lucrative potential returns.

Since 2020, the fitness sector in the Middle East and North Africa (MENA) has seen an annual growth rate of 30%. Currently, the UAE's fitness industry is valued at around $550 million, while Saudi Arabia's is at $1.7 billion.

According to Dimitri Koutsoubakis, CEO of Wellfit and supported by the UAE developer Arada, capital expenditures for starting a gym can see a 130% increase in revenue three years after opening, if managed effectively. He likens the business to a "goose that lays that kind of golden egg."

A recent statement from an angel investor to AGBI highlighted unprecedented interest from venture capitalists in this sector, with private equity and private credit companies significantly contributing to the funding and growth of local brands.

Fitness First, a longstanding brand, is undergoing what CEO Mark Buchanan describes as a "period of discovery," with new refurbishments and openings planned across the UAE.

Buchanan states, “There’s a rise in small players and individual clubs with a lot of innovation and investment happening. The market is far from saturated.”

The growing need for fitness centers is driven by low usage rates, which are 7% in the UAE and 8% in Saudi Arabia.

Salameh Swiss, CEO of private equity firm Levant Capital, which recently invested largely in the UAE's Warehouse Gym, notes that gym membership rates could potentially double depending on local demographics.

Comparatively, 16% of the UK population and 21% of the US population hold gym memberships.

Koutsoubakis comments, “Previously, securing VC or PE funding relied heavily on personal networks, but this is changing. Serious investors are now seeking out serious entrepreneurs. When managed correctly, it's a highly profitable business.”

Last November, GymNation in the UAE executed a buyout from its previous investor, JD Gyms, with support from Tricap Investments and Ruya Partners.

Since then, GymNation has doubled its business, opening 10 new gyms this year, with six located in Saudi Arabia, and plans for at least 20 more by 2025.

CEO Loren Holland, during the Dubai Active Industry event, mentioned considering crowdfunding to further expand, potentially allowing gym members to invest in the company.

Holland also mentioned the possibility of taking the company public, drawing inspiration from the success of Saudi Arabia's Leejam Sports Company, which raised $220.6 million by floating 30% of its capital in 2018.

GymNation recently reported a net profit of SAR355 million ($94.5 million) for the first nine months of 2024.

Holland added, “We are financially robust and can fund our growth independently. However, we may consider an IPO or other capital opportunities in the future.”

Source: agbi

The opinions shared in the GymNation blog articles are solely those of the respective authors and may not represent the perspectives of GymNation or any member of the GymNation team.