Brait has announced plans for a R2.5bn rights issue to lower its debt and and to pay its portion of a separate rights issue in Virgin Active.
Image: Supplied
Brait is in the final stages of its strategy to unlock value for its shareholders through the distribution of its remaining assets, and it is positioning Virgin Active for a possible listing within two years.
Brait’s chairman, Richard Nelson, stated in the annual report released on Friday that the investment group’s strategy still requires optimising Virgin Active for a listing or sale of the business, the sale of Brait’s stake in the UK fashion store chain New Look and the repayment of any residual Brait debt, to facilitate an unbundling of the remaining listed assets to its shareholders.
Virgin Active’s £175 million (R4.1 billion) capital raise is scheduled to close in August 2026, following shareholder approval expected at Brait’s extraordinary general meeting on July 16, 2026. This process forms part of Brait’s broader R2,5bn rights offer announced on June 18, 2026, aimed at deleveraging Virgin Active ahead of its planned listing in 2027–2028.
To optimise Virgin Active for a potential listing, it is preferable that the business repays some of its existing debt to achieve a suitable level of gearing, says Nelson.
The Virgin Active capital raise will provide the business with the capacity to fund its club refurbishment plan and new club rollout strategy.
Virgin Active is in the final stages of refinancing its existing South African and international facilities. Together with the Virgin Active capital raise, this will result in an interest saving of £14m per year.
Brait’s R2,5bn rights offer is pitched at a price of R1,51000 per share, which is a discount of 25% to the theoretical ex-rights price based on the five-day volume-weighted average price of R2,23270. It implies a 43% discount to the net asset value per share post the rights offer.
Brait has secured undertakings from Titan and other shareholders, who collectively hold over 90% of the Brait ordinary shares, to underwrite the R2,5bn rights offer and to vote in favour of the ordinary resolution.
After the rights offer, Brait will redeem its convertible bonds for £138m. During the 2026 financial year, Brait monetised part of its stake in Premier, raising R1.8bn through a market placing of shares (R1bn) and a “cap and collar” structure (R0.8bn).
The rights offer and the Premier proceeds, along with an increase in the existing revolving credit facility (undrawn as at March 31, 2026), will fund the convertible bond redemption and Brait’s contribution to the Virgin Active capital raise.
After these transactions, Brait will have significantly reduced its debt, removed the exchange rate risk of UK pound-denominated convertible bonds, and will have three well-capitalised businesses that are performing strongly and are appropriately positioned for exit optimisation or unbundling, said Nelson.
Premier continued its strong operational performance in th 2026 year with revenue and earnings before interest tax depreciation and amortisation (EBITDA) growth of 7% and 18% year-on-year, respectively.
MillBake’s performance remained the core driver at Premier, with the ramp-up from the Aeroton mega bakery supporting growth in the 2027 financial year. The RFG transaction closed in March 2026, with integration of the business well underway.
New Look’s trading over the Christmas quarter was in line with management expectations and resulted in the business achieving EBITDA of £37m for the year to March 31. The impact of “right-sizing” the cost base to a more digitally focused model is reflected in strong profit growth.
Brait’s reported NAV per share at March 31, 2026, was R3,27, a 7% increase compared to the year before. Virgin Active’s strong operational performance continued, with a 37% increase in EBITDA to £110m. Its growth forecast from new gyms and the refurbishment programme will position the business well for an exit in the next two years, said Nelson.
Brait's share fell 0.48% to R2.07 on the JSE on Friday, slightly lower than the R2.16 it traded at a year ago.
Visit:www.businessreport.co.za