ENTRPRENEUR Sir Richard Branson is planning a £1 billion float of his Virgin Active gym chain on the London stock market.

The group, which has operations in Italy, Spain and South Africa as well as Britain, has begun a beauty parade of investment banks to work on the planned share offering.

It is in talks with more than half a dozen potential advisers for a listing that is expected to take place before the end of next year.

Virgin Active has become one of the biggest successes in the Branson stable. It owns 167 clubs around the world. These include the former Holmes Place gyms in Britain, which Virgin acquired in November 2006. The group has about 900,000 members.

Branson has had mixed fortunes with the City. Virgin Group listed in 1986 but was taken private just two years later amid Branson’s frustration with what he regarded as the City’s short-term investment attitude. More recent flotations, such as Virgin Mobile, have proved successful.

Branson, together with the Virgin Active management, led by managing director Matthew Bucknall, owns the bulk of the shares in the group. Bridge-point Capital and Permira, two buyout firms, have a minority stake in the business as a result of their previous ownership of Holmes Place.

City sources said that Virgin Active hoped to achieve a valuation of about £1 billion. In the year to December 2006, it generated ebitda (earnings before interest, tax, depreciation and amortisation) of about £50m.

Most of the growth in the company is expected to come from further overseas expansion. Its international operations have been built up through a series of acquisitions, such as the purchase of the former Spanish arm of British gym group Esporta.

A further deal could be on the way; Virgin Active is thought to be considering a bid for the Holmes Place gyms in Spain and Portugal, which have recently been put on the market. They had previously been split off from the British Holmes Place chain. Virgin Active is also working on plans to move into Australia.

International expansion is becoming a key source of growth for the leading British chains. Fitness First, for example, is planning to be the first Western operator to break into India.

Meanwhile, Virgin Atlantic is this week expected to scrap plans for an all-business class airline.

The carrier, majority-owned by Branson, will say that uncertainty over the future of the open-skies agreement between Europe and America makes the venture too risky. Virgin had planned to fly from continental cities to America from late next year. BA is expected to give details of its planned services from the Continent to American cities in the next few weeks.

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