The structure of Gazprombank became a co-owner of the DDX Fitness network
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With the growth of the fitness market turnover, financial investors have become interested in this business. Thus, AAA Capital Management, controlled by Gazprombank, whose share is estimated at more than 1 billion rubles, became a co-owner of the DDX Fitness network, which operates on a subscription model. Such clubs can bring high profitability, but there are risks due to difficult revenue forecasting and the growing load on infrastructure, market participants warn.
On January 31, AAA Capital Management JSC received 11.1% in Ilon LLC, which manages the DDX Fitness network, follows from the Unified State Register of Legal Entities. AAA Capital Management, according to the Unified State Register of Legal Entities, is owned by Gazprombank through GPB-Project LLC and Finproject LLC. The bank, management company and DDX Fitness did not respond promptly to Kommersant.
DDX Fitness has been around since 2018. In 2019, its founders included Ivan Sitnikov, a partner of the ex-wife of the head of Rosneft Igor Sechin, Marina Sechina, as well as the founders of Rosevrobank (merged with Sovcombank at the end of 2018) Ilya Brodsky and Andrey Suzdaltsev (see “Kommersant” dated April 24, 2019). The network’s website lists 69 existing and upcoming clubs. According to SPARK, Mr. Sitnikov now owns more than 20% of Ilon, Andrey Suzdaltsev – more than 6%, and approximately 25% each belongs to Nikolai Vasilenkov and Evgenia Gaidai.
The head of FitnessData, Maxim Borovikov, says that DDX Fitness is the only network in Russia with recurring payments. The clubs provide monthly pricing and an advance payment, which will have to be paid again if classes are suspended. President of the Association of Fitness Industry Operators Olga Kiseleva says that DDX Fitness is one of the top ten players, occupying about 15% of the Moscow market. FitnessData estimates the value of the DDX Fitness business at 12–17 billion rubles, which corresponds to 1.3–1.9 billion rubles. for a share of 11.1%.
Maxim Borovikov believes that AAA Capital Management could become a financial investor. In 2024, DDX Fitness planned to double the number of clubs, which would require 7–9 billion rubles, of which less than a third could be covered by profits from existing outlets, he points out. Olga Kiseleva notes that financial structures rarely invest in the business of fitness clubs, with the exception of large companies with prospects for business growth. Investment strategist of Arikapital Management Company Sergei Suverov notes that the fitness market is considered a low-income and competitive industry, although the performance of individual players can be quite good.
Maxim Borovikov adds that investments of financial structures in fitness networks are hampered by the small scale of the industry and the closed nature of the players. Among the well-known examples, the expert names VTB Capital’s investments in the Russian Fitness Group (World Class network) with a successful exit in 2018 and the placement of Bright Fit bonds. The profitability of regular clubs in Moscow, according to Mr. Borovikov, is now at the level of 10–14%, with recurring payments – more than 20%.
According to estimates by the National Fitness Community (NFS), the turnover of the fitness services market this year could grow by 18% year-on-year, to more than 200 billion rubles. But the NSF noted that the costs of opening clubs have also increased noticeably: purchases of sports equipment over the past two years have risen in price by 40%, construction materials – by 30%.
General Director of Infoline-Analytics Mikhail Burmistrov notes that the growth in fitness market turnover is largely explained by an increase in the cost of services than by quantitative growth. Attracting and retaining new customers in 2024 will be more expensive and more difficult, he believes. The expert adds that the recurring payment model is now, on the one hand, understandable and in demand by consumers due to the popularity of subscription systems and the possibility of using interest-free short-term banking products, but on the other hand, it involves risks for investors. Mr. Burmistrov includes the additional load on the club’s infrastructure and more complex forecasting of financial flows.
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