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Third Space in £22 million buy-out

By Mark Dunne on October 19 2007

The former finance director of a health and fitness club in Soho is to open new outlets across London after buying the business for £22 million.

Eric Dunmore becomes chief executive of The Third Space Group after securing the backing of private equity firm Graphite Capital.

Dunmore, who also invested in the deal, plans to increase the Soho club’s capacity as well as to look at potential acquisitions in London and other urban areas.

Third Space’s existing management team remain with the company with a new part-time executive chairman joining the board.

The company was established six years ago by Joel Cadbury, who becomes a non-executive director. Also staying with the company is Ollie Vigors, who is responsible for the team running the club. Both have re-invested in the business.

Graphite has taken a majority shareholding in the company following its investment, which was managed by Mike Innes, Andy Gray and Mike Tilbury. Debt and working capital was provided by Simon Barnes and Shiv Sivarajah at Lloyds TSB.

Gray, a senior partner at the firm, said the prospects for the premium end of the health and fitness sector are favourable. “The Third Space is a very attractive proposition and has excellent opportunities for expansion. We have considerable experience in growing leisure and consumer businesses to multi-site operations.”

Dunmore and the vendors received legal services from Chris Putt at Wedlake Bell, while Graphite was supported by Olswang’s Fabrizio Carpanini. Lloyds TSB was represented by Osborne Clarke.

Graphite appointed Robin Illingworth, a director at Armstrong Transaction Services, to compile a market due diligence report.

Illingworth said The Third Space is so different that business comparison was very hard.

“The Third Space is a young business with a unique site and proposition,” he added. “It has tremendous opportunities ahead of it, not least because of the significant developments taking place around its current location.”

Third Space provides a range of exercise classes to its 4,300 members as well as a medical centre offering orthodox and complementary medicines and therapies. The club also has a 20 metre ozone swimming pool, a hypoxic chamber and a climbing wall.

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