Retail in Asia

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China’s Tongfang Kontafarma to move into fitness

Hong Kong-listed Tongfang Kontafarma will acquire a significant stake in Singapore’s True Group, which comprises True Yoga and True Fitness, according to a press release by the latter on Tuesday (May 30).

The deal will see Tongfang Kontafarma, which is mainly engaged in the manufacturing and sales of prescription drugs, buy a 51 per cent stake in True Group’s Singapore and China businesses, and a 29 per cent stake in its Taiwan businesses, for US$36.7 million (S$51.2 million) in cash, the release said.

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True Group said the deal is so that it can pursue expansion in China, as it looks to tap on the fitness boom there. It also aims to conduct an initial public offering on the Hong Kong Stock Exchange.

Both parties intend to grow its presence in China through corporate-owned and franchised clubs in tier one and tier two Chinese cities, with up to 20 new clubs to be opened by end-2019. This will be done through acquisitions and building new clubs, and an initial US$5 million will be set aside to help fuel its growth there, the company said.

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Gym membership in China has doubled since 2008 to 6.6 million in 2016, said the press release, citing the China Business Research Academy.

The True Group currently owns and operates 26 fitness and yoga centres in the three countries and has an annual turnover of more than US$100 million.