Private equity firm Palamon has taken a substantial payout from its £23 million re-financing of its portfolio company, Cambridge Education Group (CEG).
The refinancing package agreed with RBS will net Palamon more than 1.5 its initial investment in the firm, while also providing finance for the expansion of the English language school group.
This is the third dividend recapitalisation that the firm has completed since 2009. But, according to Thomson Reuters, it’s the first time a private equity firm has used such a strategy to take a payout since September 2010.
Palamon claims its growth investment strategy typically use modest levels of initial leverage, leaving it room to undertake such recapitalisation once a business has achieved a certain scale.
Fergus Brownlee (pictured), chief executive of CEG said: “With Palamon’s financial and strategic support we have been able to execute an organic growth strategy that has tripled the size of the business in five years. With the additional backing of RBS we now have in place the facilities and capital structure to underpin the next stage of our development.”
Palamon acquired CEG in 2007 in a partnership with a new management team, led by Brownlee.
CEG is a provider of pre-university foundation programmes and English language training primarily to foreign students wanting to attend UK universities.