The path to taking a company public is rarely straightforward, but few IPO stories include the dramatic challenges faced by Edgard Corona when listing Smart Fit on Brazil’s stock exchange. The “dono da Smart Fit” navigated unprecedented pandemic disruptions while successfully completing one of Brazil’s most noteworthy fitness industry public offerings.
Pandemic Survival Mode
When COVID-19 struck in 2020, Smart Fit faced an existential threat. Edgard Corona recalls this period with stark honesty: “When you don’t have a clear scenario and can’t enter that foggy situation knowing when it will end, it almost made the company unviable.”
The fitness chain was frequently grouped with entertainment venues like nightclubs and bars during lockdown restrictions, despite Corona’s arguments that they offered health services with appropriate distancing protocols. “They’d close nightclubs, bars, and us together,” he explains. The unpredictable cycle of closures and reopenings created severe financial strain through December 2020.
With gym operations halted but ongoing rent and employee obligations, Smart Fit’s financial situation grew precarious. “We had debt with a covenant of X times EBITDA, but EBITDA was zero because of the pandemic,” Corona explains. This financial reality necessitated capital reinforcement to renegotiate terms and weather the storm.
Pivoting to Public Markets
Initially, the company explored overseas special purpose acquisition companies (SPACs) as a listing vehicle, believing a Brazilian IPO impossible given their financial situation. “How could we do an IPO for a business that’s closed and showing a billion in losses? Who would buy this?” Corona questioned.
However, by April 2021, Smart Fit’s shareholders suggested attempting a Brazilian listing. The company secured anchor investors who committed to a portion of the offering, providing crucial foundational support for the public offering.
Smart Fit benefited from previous investor roadshows conducted for private funding rounds in 2012, 2014, 2016, and 2019. These earlier introductions to investment firms proved invaluable. “When we returned in 2021 saying we were considering going public, we already had more demand than supply,” Corona notes.
Extraordinary Market Response
The market’s response exceeded all expectations. The team conducted 220 investor meetings and received orders from 180 of them. While Smart Fit planned to raise approximately 2.3 billion reais, market demand reached an astonishing 26 billion reais—over 26 times the available offering.
This overwhelming interest created the unusual problem of substantial allocation rationing. “An investor who requested 300 million would receive only 10 million,” Corona explains. “How could they maintain their interest with such a small allocation?”
Despite these challenges, Smart Fit successfully completed its IPO in July 2021, with shares priced at 23 reais. On the first trading day, the stock surged, valuing the company at approximately 14 billion reais (roughly $2.8 billion at the time).
This remarkable journey from pandemic crisis to successful public offering demonstrates Edgard Corona’s resilience and strategic thinking. Against tremendous odds, the dono da Smart Fit transformed a period of existential threat into a pivotal financial milestone that has positioned the company for its continued expansion across Latin America and beyond.