A private equity house has conducted a beauty parade of investment banks as it weighs exit options for an education portfolio company that could fetch upwards of £350 million, EducationInvestor Global can reveal.
This publication has learnt from four sources that Levine Leichtman Capital Partners (LLCP) is preparing to exit its majority stake in GL Education, an assessment provider it acquired from Investcorp in May 2016.
Three sources said that a prospectus will put GL Education’s annual earnings before interest, tax, depreciation and amortisation (EBITDA) at £25-30 million, noting that a process is expected to launch in the first quarter of 2022.
One source said that Baird, which advised Investcorp on its reported £200 million sale of GL Education, was in “pole position” to win a sell-side mandate from LLCP, given the investment bank’s knowledge of the company, its management and the sector within which it operates. Another insider told EIG that Baird has won an instruction from LLCP – however, this could not be corroborated.
GL Education’s accounts for the year ending 31 December 2020 are due to be filed by 30 December 2021. The company’s filings for the year ended 31 December 2019 show that its revenue had grown to £38.9 million from £36.8 million a year prior, while gross profit had reached £34.7 million, up from £32 million over the same period.
Sources said that, once brought to market, GL Education’s financials will be run-rated to showcase future growth prospects, on which its enterprise value will, in part, be predicated. One insider familiar with the business noted that GL Education traded at a price equal to 15-times EBITDA in 2016, and added, “they [LLCP] won’t want to let it go for lower than that multiple” – indicating a top-end valuation of £450 million. More conservative estimates offered by bankers familiar with the company suggest an enterprise value of £325-375 million.
Founded in 1981, GL Education is a leading provider of assessments globally. GL Education’s tests are used by more than three million pupils every year in British, bilingual and international schools, as well as by education ministries, in more than 100 countries.
Under private equity ownership, GL Education has expanded its market share via M&A and market entries. In 2013, the company bought the international rights to the Cognitive Abilities Test. The following year, it acquired The Test Factory, and in 2015 took over Lucid Research, expanding its product offering in the special educational needs (SEN) segment.
In 2016, GL Education struck a deal with China’s education ministry to roll out its tests across mainland schools. The following year, the firm acquired Boardworks, a provider of digital curriculum content and creator of formative assessment platform, Doddle.
LLCP has been an active investor in the global education sector in recent years.
In January, it exited its position in interactive education provider Squla to NPM Capital, following a competitive auction process that was unveiled by EIG. Prior to this divestment, LLCP executed a bolt-on acquisition of online-learning platform Scoyo.
In July, EIG exclusively revealed that LLCP participated in a race to acquire a minority stake in two school management information system providers, Arbor Education and The Key, which were set to merge – but lost out to CBPE Capital.
LLCP also used to own Mander Portman Woodward, a string of sixth form colleges in London, prior to its sale to Kaplan in 2015.
LLCP had not responded to multiple phone calls and requests for comment at the time of publication.
Date published: 10 September 2021