Health and fitness startup Cure Fit Healthcare Pvt. Ltd will merge its fitness brand Cult.fit with premium chain Fitness First India, which is backed by hedge fund Oaktree Capital Management, as it seeks to shore up revenues for its well-funded platform.
According to a joint statement, the new entity will operate under the CureFit platform, which was founded by Myntra co-founder Mukesh Bansal and former Flipkart executive Ankit Nagori. The companies did not disclose the financial details of the deal.
Fitness First India will become a wholly-owned subsidiary of Cult.Fit once the transaction is completed in the next few weeks.
Oaktree will invest additional capital in the consolidated business, the statement added.
CureFit, which is one of the best-funded early-stage startups, aims to address preventive healthcare through a combination of engagement, coaching and delivery, using both online and offline channels. Founded in 2016, it has three verticals: Cult.fit, Eat.fit, and Mind.fit.
Eat.fit is a subscription-based food delivery vertical, while Mind.fit focuses on yoga and meditation. Fitness chain Cult.fit’s offline centres offer equipment-less workout solutions, including strength and conditioning, spinning, boxing, mixed martial arts, zumba and yoga.
CureFit’s Bansal said that the combined entity will offer a compelling health and fitness offering to customers across cities. Fitness First customers will get additional access to all Cult centres, he added.
The consolidated Cult business will have over 50 fitness centres and more than 40,000 members across Bengaluru, NCR and Mumbai. It aims to add five fitness centres every month.
Fitness First, which was started in England in 1993 and spread its wings globally, entered India in 2008. It currently has 10 fitness centres spread across Delhi-NCR and Mumbai.
“In Cult we saw a future-ready business, solid management, quality sponsors and ability to bring better fitness and health services to more Indians,” said Federico Alvarez-Demalde, senior vice president, Oaktree.
Oaktree was advised by boutique investment bank Maple Capital Advisors on the transaction. Induslaw served as the legal advisers.
Fitness First India's business has remained stagnant for the five financial years between 2012-13 and 2016-17. It reported net sales of Rs 58.8 crore in 2016-17 as compared to Rs 57.8 crore in the previous fiscal, according to VCCEdge, the research arm of News Corp VCCircle. Between 2012-13 and 2014-15, its net sales hovered in the range of Rs 50-51.5 crore.
Fitness First was planning a $500 million initial public offering (IPO) in 2011, which eventually did not take off. The following year, Oaktree Capital along with another investment fund Marathon became majority shareholders in the company. In 2016, Oaktree divested the Australia unit of Fitness First by selling it to PE firm Quadrant Private Equity.
The deal with Fitness First India could provide a fillip to CureFit's revenues.
In the financial year 2016-17, its first full year, the company posted net sales of Rs 3 crore but its losses were six times that amount, filings with the Registrar of Companies (RoC) show.
According to VCCEdge, CureFit recorded losses of Rs 17.98 crore in 2016-17. CureFit’s total expenditure stood at Rs 21.87 crore.
Speaking to TechCircle in March this year, Bansal claimed that the firm’s revenue was doubling every six months with a current monthly revenue run rate of $1 million.
CureFit has consistently raised funding since setting up shop just two years ago.
Last August, it secured $25 million in a Series B round from existing investors Accel Partners, IDG Ventures, Kalaari Capital and UC-RNT Fund, a joint venture between Ratan Tata’s RNT Associates and University of California.
Earlier that month, the company raised fresh capital from venture debt firm Trifecta Capital Advisors LLP and Infosys co-founder Kris Gopalakrishnan’s Prathithi Investment Trust.
Three months before that, the startup had secured $3 million (Rs 19.2 crore) in a fresh round of funding from UC-RNT Fund.
Accel Partners, IDG Ventures and Kalaari Capital had pumped $15 million into CureFit in July 2016.
CureFit has also acquired a few businesses as part of its expansion strategy.
In August 2016, it invested Rs 20 crore in Bangalore-based Cult Fitness Pvt. Ltd for a controlling stake.
Last July, it bought Bangalore-based yoga chain a1000yoga for an undisclosed amount.
In March 2017, it had acquired Bangalore-based online food delivery startup Kristys Kitchen in a cash-and-equity deal. The month before that, it bought a majority stake in fitness chain The Tribe.