Xponential Fitness Builds Back in Debut After Shrunken IPO

(Bloomberg) -- Xponential Fitness Inc., the franchise owner of boutique fitness brands including Club Pilates and CycleBar, rose 2.1% in its trading debut after earlier sinking below its price in an anemic initial public offering.

Shares of the company, which fell as much as 8.4% below their $12 offer price on Friday, closed at $12.25, in New York trading, giving Xponential a market value of $531 million.

The Irvine, California-based company raised only $120 million in the IPO, selling 10 million shares Thursday after marketing 13.3 million of them for $14 to $16.

The listing comes the week after F45 Training Holdings Inc. priced its IPO at the midpoint of a marketed range to raise $325 million. F45, backed by actor Mark Wahlberg, gained only 1.3% on its first day and has since fallen 5.3% below its offer price.

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 was led by Bank of America Corp., Jefferies Financial Group Inc. and Morgan Stanley. Xponential’s shares are trading on the New York Stock Exchange under the symbol XPOF.

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