Pure Gym pulls London float. Have low cost gyms run out of puff?

Britain's biggest gym chain complains of weak investor demand for new issues across Europe. There could be more to it than that

Sir Chris Hoy is the face of Pure Gym, which has pulled its float (Getty)

Pure Gym abandoning its float is a gift to journalists and headline writers. Pure Gym has run out of puff. It's Pure out of breath. It has ended its race early. It has left the field with an injury. Sigh – if only all Tuesday mornings were this easy. But fun and games aside, it’s worth taking a closer look at what’s going on.

Pure Gym jumped back on the to IPO treadmill having paused for breath in the wake of the Brexit vote (sorry, sorry). Sources close to the company say that since then it has found out that while equity markets have been buoyant, the appetite for new joiners is less so and the market is tepid across Europe. Just last month, for example, Spain’s Telefonica shelved plans to float its infrastructure business Telxius in the wake of limited investor interest. IVG Immobilien postponed the initial public offering for its German office unit last night. Others have struggled upon reaching the markets.

Perhaps the appetite for the risk posed by new companies is not what it might be in these in these uncertain times? That might partly explain the end of the low-cost gym operator’s workout (couldn’t resist). But it might also be that the enthusiasm for this particular sub-sector is particularly limited.

Pure Gym’s rival Gym Group has, after all, given investors a bumpy ride since its flotation a couple of years back. Its shares have been on the skids over recent weeks.

Then there is the sector’s history. In their infancy gym chains looked like sure things, locking their customers in and extracting high monthly fees regardless of whether they actually used the fancy facilities they were paying for.

Pure Gym played an important role in disrupting that model, leaving a trail of devastation in its wake. Its low-cost offer has been compared to the likes of EasyJet and Ryanair, which disrupted the dominance of the big flag carriers like British Airways with a similarly no frills approach to short haul flights.

The difference is that it’s easier to see Pure Gym’s own model being disrupted by changing consumer tastes than it is theirs.

People aren’t going to stop flying anytime soon, but they might find alternatives to going to the gym. They might fancy more sociable activities, such as team sports. Solo fitness fans have any number of alternative options. Cycling, swimming, or just going down the park for a run. Once you’ve bought your Nikes and some cheap kit from Sports Direct, it’s an even more price-friendly way of getting fit than is Pure Gym’s cost-conscious approach.

It’s not so much that Pure Gym has run out of puff. When faced with all that, investors simply lacked the appetite for Pure Gym’s offer at this time. Or, more to the point, they didn't have the appetite to pay what Pure Gym wanted. To get its shares away and create the sort of active secondary market for them that is crucial to the success of an IPO, the company really needed a low-cost float.

It’s private equity owners didn't much fancy that, so they, the management, and face of the company, Sir Chris Hoy, will have to wait a bit for their payday. At least they’ll have some spare time for a workout or two.