Brazilian gym operator Smartfit plans to continue tapping the local bond market to help fund its expansion, José Luís Rizzardo, director of investor relations, M&A and treasury, told LatinFinance.
Spreads on the company’s debenture issues have fallen to 1.1% over the DI interbank lending rate in the current quarter from 1.4% at the beginning of this year and 2.4% in 2021, underscoring the appeal of the local market, he said in an interview.
Smartfit, which raised BRL2.3 billion in an initial public offering in 2021 and is present in 15 Latin American countries, has no plans to use the stock market for additional fundraising, Rizzardo said.
“We do not see any need to go back to the equity market with a follow-on to raise more capital. The funding strategy is much more aligned to going to the debt market in debentures or through bilateral agreements with banks in various LatinAmerican countries,” he added.
Should the Brazilian central bank is reverse course and begin tightening monetary policy, Rizzardo said it would not alter the company’s funding strategy. “This alone does not affect our appetite to invest and to do business, although we obviously monitor the situation when this happens,” he said.
FLEXING MUSCLES
Smartfit has made a dozen acquisitions in the Latin American region since 2020 and has also secured bank loans in Colombia, Peru and Chile, Rizzardo said, adding that the firm is currently preparing a test operation in Morocco, in its first foray beyond Latin America.
The company, which has around BRL5 billion in debt and BRL2.5 billion in cash, currently operates a 1,500-strong gym network and intends to open up to 260 more this year.
Brazilian private equity fund Pátria has a 30.1% stake in Smartfit and controls the company jointly with the Corona founding family, which owns 14.8%. Canada Pension Plan Investment Board has 12.1% and Singaporean sovereign wealth fund 8.2%.
FitchRatings upgraded Smartfit in May to AA+ from AA on its local scale, with a stable outlook.
