Palamon Capital Partners has agreed the sale of its majority stake in Cambridge Education Group to Bridgepoint. The sale will generate a return on investment for Palamon of 14.6 times and an IRR of 58 percent.
Palamon Capital Partners (“Palamon”), a leading lower mid-market European private equity firm, has agreed the sale of its majority stake in Cambridge Education Group (“CEG” or “the Group”) to Bridgepoint. The sale will generate a return on investment for Palamon of 14.6 times, with a capital gain of £141 million and an IRR of 58%.
Cambridge Education Group is a leading player in the international schools market, providing pre-university education to students from over 95 countries via its global recruiting network. It forms part of the rapidly growing UK education export industry, which is estimated to be worth £17.5 billion p.a.1 and one of the ten largest export segments in the country.
Palamon originally sourced its investment in CEG directly from the founding team of Nick Golding and Elizabeth and Ann Armstrong in 2007. At that time CEG taught 460 academic students per year across two campuses in Cambridge and Canterbury. Today, CEG teaches over 3,000 academic students and thousands of short-term English language students each year across its four divisions in three countries. In excess of 75% of CATS students gain entry into top ranked universities each year.
During Palamon’s ownership, CEG has grown revenues five-fold to an estimated £90 million for the academic year 2013-14. This growth has been exclusively organic as the management team expanded its teaching capacity, signed on new sites and focused on providing the highest standards of education to its primarily international customer base.
Louis Elson, Managing Partner at Palamon, commented: “We are very proud of having played an important part in building CEG into a leading brand with a dominant position in the education sector. This is a classic ‘breakaway’ Palamon investment. We identified an unusual opportunity in a small business context with strong potential and combined it with exceptional management talent to deliver explosive long-term growth. I speak for the various Palamon team members who conceived and transacted on the CEG investment, including Dan Mytnik who gave invaluable guidance to the company throughout its development, in recognising the great achievement of CEO Fergus Brownlee and his Chairman Stephen Warshaw. We wish Fergus and his team continued success with their new partners.”
Fergus Brownlee, Chief Executive of CEG, added: “We are delighted with what we have been able to achieve during the past seven years with the close and supportive collaboration of our partner, Palamon. We have taken CEG from being a small UK platform to a market leading brand with an international presence and are now looking forward to working with Bridgepoint to capture the next stage of growth.”
Stephen Warshaw, Chairman of CEG, added: “This is a tremendous result for the management team here at CEG, who have worked so hard to build the business by expanding teaching capability and entering new sectors and markets, whilst delivering high standards of educational and pastoral care. We have benefited from a highly successful partnership with Palamon, whose strategic vision and financial expertise have been invaluable in the evolution and growth of CEG.”
This is Palamon’s sixth exit from its €670 million 2006 fund, Palamon European Equity II, which to date has generated cash proceeds of €660 million and a 3.6x return and 28% IRR on fully realised investments. Palamon II still has 11 high growth companies remaining in its portfolio, including; Retail Decisions, a global fraud prevention provider for card-based and on-line transactions; IDH, the largest NHS dental practice group in the UK and OberScharrer Group, a leading ophthalmic healthcare business in Germany.
– Ends –
1 Official UK government statistics: www.gov.uk/government/news/new-push-to-grow-uks-175-billion-education-exports-industry
Louis Elson, Managing Partner
Palamon Capital Partners
Tel: +44 20 7766 2000
Citigate Dewe Rogerson
Tel: +44 7774 133934
Advisers to the transaction
For Palamon Capital:
- DC Advisory (advisory)
- Slaughter & May / Eversheds (legal)
- PWC (financial)
- Parthenon (commercial)
- Rothschild (advisory)
- Travers Smith (legal)
- PWC (financial / tax / structuring)
- Parthenon (commercial)
- GK (political)
- Marsh (Insurance)
For CEG management:
- PWC (advisory)
- Macfarlanes (legal)
Palamon Capital Partners
Palamon Capital Partners, LP is an independent private equity partnership founded in 1999, which is focused on providing equity for European growth services companies. Palamon, as a pan-European investor, originates, executes and manages investments in the UK, Germany, Benelux, Italy, Spain, Norway, Denmark and Sweden. The Firm targets investments in companies where it can be the lead private equity provider and where it can provide strategic direction and partner with management to help build equity value. The Firm manages funds with €1.3 billion of equity capital for investment.
For more information on Palamon refer to www.palamon.com.
Cambridge Education Group
Cambridge Education Group (CEG) is a leading global education pathway provider, working with partner universities and its own colleges to help international students progress to prestigious post-secondary academic institutions in the UK, US and Europe. Operating under the CATS College, Cambridge School of Visual & Performing Arts, FoundationCampus and Stafford House brands, CEG offers premium quality high school, creative arts, English language and on-campus pathway programmes to students from 95 different countries. CEG has been helping UK and international students achieve their best for over 60 years and its mission is to promote educational aspiration; develop life and learning skills and open academic pathways for all its students to fulfil their potential and ambition.
For more information on Cambridge Education Group refer to www.CambridgeEducationGroup.com