After several years of restructuring and cutting debt, investment group Brait is now largely defined by its biggest asset, Virgin Active.
Once a diversified investor with large stakes in everything from fast moving consumer goods (FMCG) to fashion, including a former holding in Pepkor, SA’s largest fashion retailer, Brait has steadily sold off or reduced most of its other investments.
The company will continue to sell off its stake in Premier Group, but has said it will only do so as and when the price is right. With Virgin Active now making up 62% of the value of its assets, the question is: what is Brait without it, and how long can a single business carry the weight of the whole group?
Concentration has strategic consequences. If Virgin Active manages to reach its medium-term earnings before interest, tax, depreciation and amortisation (ebitda) target of £180m (R4.27bn) to £200m, Brait could unlock value possibly through a listing or a trade sale. But if earnings stay flat or the business continues to need heavy investment, Brait may end up being defined as nothing but a holding company for Virgin Active.
In its latest results for the year to end-March, Brait valued Virgin Active at R10.2bn, based on steady earnings and a consistent valuation multiple. The fitness chain’s operating performance has improved, with earnings back to pre-pandemic levels. But the real test lies in turning that recovery into strong cash flow and, eventually, into value for shareholders.
That is where the pressure lies. Despite the earnings rebound, Virgin Active is not generating much spare cash. According to reports, most of the earnings are used to keep the business running, paying for maintenance and servicing debt. What’s left is limited, especially given the company’s need to invest in upgrading clubs and managing a sizeable debt load.
Virgin Active’s repositioning strategy from traditional gym operator to premium wellness ecosystem has been well articulated. The company is investing heavily in refurbishments, launching flagship clubs such as the V&A Waterfront wellness precinct in Cape Town, and integrating partners such as Discovery Vitality and Kauai. Yields are up 8% and revenue rose 13% in the first four months of financial year 2025. Still, the business is relying more on yield management than membership growth and total active members remain below pre-Covid levels.
Brait, meanwhile, has worked to clean up its balance sheet. A recapitalisation in August 2024 included a R1.5bn rights offer, debt extensions and repurchases of exchangeable and convertible bonds. It also sold a further R444m of Premier shares. This helped reduce debt by R1.378bn and lifted net asset value (NAV) per share to R3.06, up 6% on a like-for-like basis. However, that figure remains well below historic levels and the NAV uplift comes alongside a threefold dilution in shares in issue.
Premier, previously a key value driver, has now become a funding lever. Brait’s shareholding dropped from 35.4% to 32.3% after the share sales. And while the FMCG group continues to perform strongly, its strategic importance to Brait has changed from anchor asset to source of liquidity.
In contrast, New Look contributes just 3% of Brait’s total assets and is not considered core. The UK fashion retailer has been recapitalised, with Brait’s participation diluted to 8% after a new capital raise.
While Virgin Active’s momentum has lifted Brait’s prospects, the group’s risk disclosures point to deep structural pressure. This includes exposure to capital-intensive assets, currency volatility and macroeconomic uncertainty across its operating regions. Brait has itself identified the risk of timing mismatches where ongoing investment needs in core assets may not align with market windows for value realisation.
Brait’s stock performance tells the story of that volatility. According to Iress Data, the company has wiped out more than 86% of its value since listing. But over the past year its stock has surged 193% lifting its market capitalisation to about R8.4bn, a move largely driven by the improved performance at Virgin Active. Meanwhile, Premier has gained 123% since relisting in March 2023.
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