Providence-backed Blackboard puts Cashnet on the block

Blackboard Inc, a portfolio company of Providence Equity Partners, has put Cashnet up for sale, according to four sources.

Deutsche Bank is advising on the process, two of the people said. Cashnet provides electronic billing, payments and student payment plan services for more than 700 campuses.

The company reaches 5 million students nationally, according to the Cashnet website.

Cashnet produces about $60 million in Ebitda and may command a low-double-digit multiple, sources said. “It’s a decent business,” one of the sources said.

The auction is expected to launch this week, sources said.

Blackboard has owned Cashnet for two years. Blackboard acquired the company, then known as Higher One Holdings Inc, for $260 million in August 2016.

The acquisition was seen as a move by Blackboard to further expand into financial services, the Washington Business Journal said at the time.

A pioneer edtech company, Blackboard had seen its growth slow due to quicker and more nimble competitors encroaching on its turn, Reuters said.

Blackboard itself was up for sale in 2015, Reuters reported. The process, which didn’t result in a sale, valued Blackboard at $3 billion.

Blackboard has been expected to put Cashnet up for sale to deal with its $1.43 billion debt load.

In March, Blackboard’s weak cash flow, strained liquidity and very high debt-to-Ebitda leverage spurred Moody’s to downgrade Blackboard’s corporate family rating to Caa1 and its probability of default rating to Caa1-PD.

The Caa rating means the company is highly vulnerable to non-payment, and ultimate recovery is expected to be lower than that of higher-rated obligations, according to Moody’s definitions.

Blackboard is a relatively long investment for Providence. The buyout shop took Blackboard private in October 2011, paying $1.64 billion for the edtech company.

In January, Blackboard announced organization changes, including launching two new units, global client operations and success and global markets. Blackboard a month later, in February, named Rick Essex its CFO after Lisa Mayr left in January to join EverFi.

Providence and Deutsche Bank declined comment. Cashnet could not immediately be reached for comment.

Action Item: Contact Blackboard CEO William Ballhaus at +1 202-463-4860