After a rocky road to public trading, Aussie-born fitness empire F45 has finally listed, closing its first day trading on the New York Stock Exchange with a valuation of almost $2 billion.
The IPO raised $325 million for the business, and the share price saw a modest increase of 1.3% on its first day of trading — from US$16 ($21.54) to US$17.20 ($23.16) — giving F45 a market cap of US$1.46 billion ($1.95 billion).
The listing follows a tumultuous year for F45. It comes just over 12 months after it announced it was listing on the NASDAQ through a merger with special purpose acquisition company, or SPAC, Crescent Acquisition Corporation.
That deal eventually fell apart, with Crescent citing “prolonged uncertainty” around the COVID-19 pandemic.
“We ultimately concluded that approaching the public markets at this time was not the right option for F45,” F45 co-founder and chief Adam Gilchrist said in a statement at the time.
“Our business remains resilient and strong and we look forward to continuing to serve and support our members and franchisees.”
It’s early days, but ultimately it seems the fitness franchise — which is trading under the symbol FXLV — has seen a decent result. Investors in the business include Hollywood actor Mark Wahlberg, who reportedly saw a 200% return on investment.
So, how did an Aussie-born business grow from one single Sydney gym to a business with 1,900 franchisees across 50 countries, publicly traded on one of the most famous exchanges in the world?
From the SmartCompany archives, here’s how it happened.
This following was originally published on July 2, 2020.
Early days
F45 was founded in 2012 by then chief executive Rob Deutsch, who opened their first studio in Paddington, Sydney.
Deutsch set out to provide high-intensity, functional and fun workouts in 45-minute boosts, and swiftly perfected the studio’s workout model — ‘F’ for functional, in 45 minutes.
Tech plays a big role in the workout, and explains F45’s scalability. Customers are guided through workouts by a set of digital displays, while heart monitors are used to track their heart rates and calories burned, and to keep track of individual progress.
Hardcore members can also sign up for the F45 Challenge app, which offers access to nutritionists, meal plans and food tracking.
Once he had the 45-minute workout model down to a T, Deutsch enlisted Gilchrist as co-founder, and the pair sold their first F45 franchise in 2013.
Swift growth
To say the franchise grew quickly would be an understatement. Within two years, F45 had sold some 500 franchises.
By 2017, there were 750 studios around the world, reportedly each bringing in $400,000 in turnover each year.
Fast forward to 2019, and the business had more than 1,500 studios in 40 countries. In March of the same year, American actor Mark Wahlberg invested in the business, leading a round that reportedly valued it at US$450 million ($634 million).
A FastCompany article last year said the franchise had signed up 84 studios in a single month. At the time, Deutsch told the US publication he had dreams of growing to between 5,000 and 7,000 studios in the US.
Rocky recent history
Early this year, Bloomberg reported F45 had confidentially filed for IPO in the US, suggesting the listing could come in the first half of 2020.
But, come June, the listing appeared to be on ice, with Australia’s Sydney Morning Herald reporting it hadn’t filed a single document yet.
At the same time, in late 2019 F45 brought legal proceedings against competitor gym franchise Body Fit Training, founded in 2017 by former AFL coach Cameron Faloon.
F45 claimed Body Fit had infringed its patent relating to “remote configuration and operation of fitness studios from a central server”.
The former said it had lost income as a result, as prospective F45 franchisees were being snapped up by Body Fit instead.
But, before the legal stoush could be wrapped up, co-founder Deutsch announced he would be stepping down from the business.
Back in April, the founder announced in an Instagram post that he had “transitioned out” of his role as chief executive, but remained a shareholder in the business.
“As the founder of F45, I’ve had the privilege of helping build the company into one of the fastest-growing fitness franchises in the world,” he said in the post.
Of course, at the same time, F45 studios all over the world were forced to close their doors due to the COVID-19 pandemic. But, Deutsch said the future for F45 “is bright”.
“I look forward to watching from afar,” he said.
“I look to the future with optimism and wish all friends, family, and franchisees a safe journey through this challenging time.”
He also hinted that he was working on new projects, saying he has “a sneaking suspicion we will meet again soon in the wellness space”.
According to the Sydney Morning Herald, Deutsch has been named as a director for two businesses: R2 Capital and Youngr.
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