The True Group fitness chain is joining forces with a Chinese investor to establish 20 new clubs in China over the next three years.
Singapore-based True Group, one of Asia's leading fitness and wellness providers, will collaborate with Hong Kong-listed Tongfang Kontafarma in a US$36.7 million (S$51 million) venture.
The move involves Tongfang Kontafarma acquiring a 51 per cent stake in True Group's Singapore and China businesses and a 29 per cent holding in its Taiwan unit.
The partnership will then expand the business through corporate- owned and franchised clubs across first- and second-tier Chinese cities.
True Group founder and group chief executive Patrick Wee told The Straits Times that True Group has an annual revenue of about US$100 million and about 1,800 employees across all its 26 centres in Singapore, China and Taiwan.
Mr Wee noted that the fitness market in China has doubled in size over the past two years, presenting good growth opportunities.
"The growth areas for True Group in China is in the sports business. We are looking at bringing in sporting talents to train customers in sports academies, as well as managing sports centres and condominium-operated fitness centres. There are many low-hanging fruit for us," he said.
"Also, as part of our partnership, we intend to expand clubs in industrial parks, many of which have high demand for fitness centres," he said.
Mr Wee revealed that, as part of the collaboration, True Group is also paving the way for an initial public offering on the Hong Kong Stock Exchange.
"We want to use Hong Kong as a listed platform and spin True Group off as a listed company. The PE (price-earnings) multiples plus brand recognition of our partnership is very strong. This will attract a substantial amount of both institutional and private shareholders," he said.
True Group, which has 10 clubs and 47,000 members in Singapore, plans to open one to two more a year in the city fringe over the next few years. Mr Wee acknowledged that several local gyms had closed in recent years, but noted that such occurrences are "a normal part of business".
"There are always openings and closures of any business. Fitness operators are no different from other retail or food and beverage firms.
"We try to work with operators that are closing down, to accommodate some of their members and ensure their fitness needs are met with us instead. We are happy to work with other operators for a smooth transition of members," he said.
Mr Wee noted that Asia's growing affluent population is adopting a healthier lifestyle and there is growing demand for fitness options here. Despite increasing competition on several fronts, including cheaper or free alternatives like green exercise spaces in the heartland and free group classes in malls and condominium gyms, Mr Wee believes such competition will only stand to benefit True Group.
"If you become inspired to exercise through such exposure, it will help us attract customers to regular, dedicated classes at our own clubs," he said.
While other operators target specific segments, True Fitness caters to the entire spectrum from senior executives to retirees, Mr Wee said.
"We do not brand ourselves as an exclusive gym. We want to create a local atmosphere where customers feel like they are exercising with their own familiar community."