Fitness Franchiser Xponential Gets $120 Million in Shrunken IPO

(Bloomberg) -- Xponential Fitness Inc., the franchise owner of boutique fitness brands including Club Pilates and CycleBar, downsized its initial public offering and priced it below a marketed range to raise $120 million.

The Irvine, California-based company sold 10 million shares on Thursday for $12 each, according to a statement. Xponential earlier offered 13.3 million shares for $14 to $16.

Xponential delayed its listing plans when the coronavirus pandemic hit last year. Calling itself the largest boutique fitness franchiser in the U.S., it continued to grow through the pandemic, according to its filings with the U.S. Securities and Exchange Commission. As of March 31, it had 1,765 open studios, 294 more than at the end of 2019.

During the pandemic, Xponential’s outlets turned to outdoor and digital workouts. The company operates a film studio that produces digital content for its brands, which also include Pure Barre, dance-based cardio workout AKT and treadmill-based Stride. Rumble has its own digital platform, Rumble TV.

The company’s revenue declined and its losses mounted over the past year. It had a net loss of $4.8 million on revenue of $29 million for the three months ended March 31, compared with a loss of $1.9 million on revenue of $32 million in the first quarter of 2020.

Investors have agreed to a $200 million private placement convertible preferred stock in conjunction with the IPO, according to the filings.

In March, Xponential said it acquired boutique boxing workout brand Rumble, which counts Justin Bieber, Selena Gomez and David Beckham among prior class attendees. The deal’s value, which wasn’t disclosed in the announcement, was as much as $300 million, the people familiar with the matter said.

Xponential’s largest investor is Chairman Mark Grabowski, a former TPG partner who founded Snapdragon Capital Partners. He was set to control 39% of Xponential’s shareholder voting power after the listing.

The offering is being led by Bank of America Corp., Jefferies Financial Group Inc. and Morgan Stanley. Xponential’s shares are set to begin trading Friday on the New York Stock Exchange under the symbol XPOF.

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