Virgin Active 'set for flotation or sale'

Any such move would trigger a huge windfall for the entrepreneur as Sir Richard holds a 75 per cent stake in the business he founded in 1999.

The Sunday Times said advisers including Goldman Sachs and Royal Bank of Scotland were working on the basis of a flotation in the autumn.

The 187-strong chain announced record profits in May and a tenth consecutive year of growth, despite pressure on the sector due to the recession.

As well as the flotation option, the Sunday Telegraph said management had met a series of private equity suitors about a potential sale. KKR, Blackstone, Advent and CVC are among the buy-out houses which could be interested.

Sir Richard is expected to retain a sizeable stake in the business as part of any ownership change, although he could delay the flotation move until next year if recent market turbulence continues after the summer.

Virgin needs to get the timing right because a previous attempt to list the company in 2007 was scuppered by market volatility.

The gym business, which acquired Holmes Place in 2006, has based its success on its strategy of situating clubs in sizeable catchment areas and using facilities large enough to drive economies of scale.

During the last year it has also increased the number of staff on the gym floor and improved the range of equipment and classes on offer.

Eight new clubs were opened in 2009 – all of them overseas – while agreements have been secured for a further 17 clubs to support international expansion. The group is also looking to open new sites in Bristol and Guildford.