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This publication’s ninth UK Summit attracted delegates from across Europe to discuss trends, challenges and opportunities facing education operators and investors based on the continent

Last month, more than 150 delegates attended EducationInvestor Global’s ninth UK Summit, where more than 30 speakers assembled to explore investment and operational trends impacting European education markets. 

The multi-stream event, which was hosted at the Marriot Grosvenor Square Hotel in the heart of Mayfair, London, followed the success of this publication’s Asia Summit held in Singapore in May and, more recently, our MENA Conference, hosted in September in Dubai. 

Rajay Naik, chief commercial officer at pathway provider Study Group, launched proceedings with a keynote presentation in which he explored how the shifting market environment is transforming educational delivery models. Political headwinds – notably those caused by Brexit – the rise of online learning and international students were key talking points. Naik forecasted “a big shift in terms of student acquisition”, noting that there is a “huge opportunity for the private market to support, and capitalise on, [UK] universities’ online propositions” and transnational offerings at a time of political turbulence in their home market. 

He said: “Take a step back and ask: ‘why do we exist?’. If we can position ourselves as an answer to the sector’s challenges… then this creates a massive opportunity.”

Next, Matt Robb, managing director at event sponsor EY-Parthenon, set the scene around investment activity across European education markets, noting that last year, deal volume was relatively flat. A “black cloud on the horizon” in the UK, he said, was not the nation’s divorce from the European Union, but the prospect of a Labour government gaining power, which could look to fold private schools into the state sector amid a wider anti-private education rhetoric. Robb echoed Naik’s notion around the potential for the private sector to strengthen its position in higher education (HE) delivery, and underscored robust growth in European private HE markets. Although the market for learning management systems (LMS) is “pretty boring”, Robb suggested that LMS providers will come to stores troves of commoditisable data that will “one day be useful” to artificial intelligence firms, though it’s currently unclear as to “where the money is going to come from”. 

Mid-morning saw EducationInvestor Global host its first-ever debate session. Chaired by Gerard Kelly, founding partner of PR firm Gerard Kelly & Partners, the panel pitted two proponents of private education – Matthew Adshead, proprietor and headmaster of The Old Vicarage School; and Aatif Hassan, founder and chairman of Dukes Education – against a pair of critics – James McAsh, Labour councilor and #AbolishEton activist; and Jess Staufenburg, commissioning editor of think tank Private School Policy Reform – to debate Does private education warp public outcomes?

First to weigh in on the controversial subject was McAsh, who likened a private education to a “diplomatic passport” that allows students to “skip customs and get to the same [career and social] destinations much, much faster”. He argued that “private schools are not simply well-funded comprehensives” and students who attend them are “not luckier, but simply born to wealthier parents”. 

Adshead countered by saying that “private education does warp public outcomes, but in a good way”. What’s warped for the worse, he argued, “is the general view of the sector”, which is too acutely focused on “five or six schools” – the likes of Eton and Harrow among them. “The elephant in the room is charitable status,” said Adshead, which is enjoyed by most independent schools in the UK and exempts them from paying VAT. “It does need reform,” he admitted, “and these schools need to start behaving like charities if that’s what they’re going to call themselves.”

In response to a claim by Adshead that some private schools charge annual fees amounting to less than what the government spends per child on education, Staufenburg said “even when fees are lower, most working-class families can’t afford them”. Costs are exacerbated and often unsustainable if a family has more than one child, she added. 

Hassan, who also owns a cluster of specialist schools, said the state schooling system failed him as a young child when he was diagnosed with dyslexia and displayed traits of ADHD, which led his father to place him in a private school. He suggested the idea of eradicating private schools was nonsensical, and argued that “there are many people on both sides of the camps” – in reference to left- and right-wing political fields – “who have simply dismissed #AbolishEton’s proposals”. We should instead be arguing over “how to uplift the lives of young people,” he said. “It’s about raising standards. You don’t just get rid of what good looks like.”
After a networking break which followed the debate, the Summit broke into two streams: Finding Value and Operational Excellence

Matthew O’Kane, managing director of Nexus Investments, primed the Finding Value audience with a presentation on how to spot early signs of success in ed tech start-ups. Backing unicorns and avoiding donkeys is the aim of the game, he said, and to have a good chance of winning, investors must spread their bets evenly as “30% of ed techs fail in the first few years”. 

Meanwhile, in the Operational Excellence stream, David Eaves, head of M&A at nursery group Bright Horizons shared his insight on strategising for success in early years education, which, in the UK, is a booming market. To scale in a sustainable manner, operators need to be realistic about the capital requirements of acquisition – something, Eaves said, is often underestimated. Consideration must also be given to more flexible and creative services, such as pick-up services and offering more hours of care, as well as investing in your staff. “Nurseries live and die on their local reputation,” said Eaves. “You cannot build a reputable group if you do not have a motivated and happy staff. Good people are at a real shortage in this sector; the ones that manage to retain them are the ones that succeed.”

Next, in the Finding Value stream, a panel chaired by EducationInvestor Global editor Josh O’Neill brought together Tim Ashlin, partner at private equity firm Synova Capital; Joe Guilfoyle, head of corporate finance at property group Savills; and Rob Jordan, investment director at government-owned finance institution CDC Group. The Investors’ roundtable presented views on educational property investment, private equity plays and development finance. In the UK, a left-wing government – not Brexit – poses the most imminent risk to education investment, panellists agreed. They flagged difficulties in recruiting and retaining talent as one of the main stumbling blocks to building future-proof education assets, but insisted the UK remains an attractive market in spite of political volatility. 

Next door, in the Operational Excellence stream, Edward Wild, director at recruiter Wild Search, brought together Ben Figgis, headmaster of Ardingly College; Anita Gleave, founder and chief executive of Chatsworth Schools; and Mark Malley, chief executive of schools group Bellevue Education, to discuss the secrets to unlocking opportunities in the UK schools market. The panellists agreed that quality is absolutely key. Gleave said: “Fundamentally, the premise is that schools must deliver the absolute best they can; being the best in class is what you need to be. Parents are investing in the school and it’s not just elite parents who are willing to pay.” Malley added that teacher training is crucial and helps bolster the quality of education overall.

The Finding Value stream saw Sam Fenton-Whittet, investment director at Oakley Capital, take the stage alongside O’Neill for a fireside chat. Fenton-Whittet outlined his private equity firm’s range of education holdings, which include stakes in Inspired Education, a French business school and a private German university. “We’re terrified of buying bad assets… and we hate exiting good ones,” he said. He pointed to continuing pockets of opportunity in European private higher education, which presents an attractive proposition to growth investors like Oakley Capital due to higher levels of fragmentation showcased by the sector. 

Simultaneously, in the Operational Excellence stream, the managing director of Investor Publishing Vernon Baxter sat down with William Macpherson, non-executive director at QA, the digital training provider, to discuss the operational dynamic in the UK training market today. Digital learning has initiated a paradigm shift in the training and skills landscape, Macpherson said. “What we see much more of is blended learning, with a touch of digital learning as well as classroom learning,” he said. “It’s not so much one thing or another.” Additionally, universities are becoming increasingly willing to partner with training providers, as they come under pressure to plug skills gaps in future workforces. Speaking about the convergence between degrees and skills, Macpherson said there’s a “spectrum” out there, with some institutions eager to forge partnerships and others “less entrepreneurial” in their approach to teaching. “It would be useful if universities taught students these skills, so that the workplace didn’t have to,” he said.

After lunch, the Finding Value stream reconvened with a presentation by Chris North, principal at Permira Funds, on the buyout house’s entrance into European higher education earlier this year through its acquisition of a private university from Laureate. Since closing the deal, Permira has been busy lining up further acquisitions after installing a new management team to drive growth across Europe, said North. 

Closing the Operational Excellence stream, Baxter chaired a panel on the changing face of tertiary education, uniting Mary Bishop, principal consultant at higher education management consultants Wells Advisory; Valery Kisilevsky, group managing director at private university group Global University Systems; and Naik of Study Group. Panellists agreed that the market is “dynamic” as it goes through a period of transition, with increased demand for skills training, potential changes to tuition fees, and pressures to think about revenue diversification. Naik argued that rankings and tiers are not the “right lens” to look at institutions anymore, but instead the focus is on standing out from the crowd. “Underneath the surface, universities are changing,” he added. “The demand is largely characterised by the students. If you think about what employers are looking for, it’s largely about transferable skills.” 

Mid-afternoon, the Summit broke into the final two streams: Disrupting Forces and Beyond Borders.

David Angrave, chief operating officer at educational publisher Twinkl, kicked off proceedings in the Disrupting Forces channel with a presentation on his firm’s so-called “grass-roots revolution”. In under nine years, the “teacher-led” organisation has developed from a small start-up into an organisation spanning international markets whose products are used by five million people, Angrave explained. The secret? A “healthy scepticism” of high-tech solutions and “always asking: is that the best we can deliver for educators?” he said. 

Meanwhile, in the Beyond Borders stream, Simon Gamblin, partner at law firm Clyde & Co, delivered a presentation that explored the reasons why overseas investors are snapping up UK businesses. He said that while Brexit makes negative headlines, many see it as an opportunity to tap into the UK’s education market, and, with it, the sector’s esteemed global reputation. “A falling pound make opportunities cheaper,” he said. “Among the gloom, there’s a serious message: there’s an opportunity amid all the turmoil.” Chinese investors are particularly keen on buying into the UK market and the British curriculum, and have recently snapped up struggling schools. Meanwhile, French and Icelandic nursery groups have stuck flags in British soil as well. 

The final session in the Disrupting Forces stream was a panel chaired by Patrick Hayes, an outgoing director at the British Educational Suppliers Association, which united Gregory Biggs, director at educational consultants Fieldwork Education; Sean Graham, managing director of digital media company CreatorUp; Matthew Koster-Marcon, founder and chief executive of Learning Ladders; David Meadows, marketing director of online course delivery company Interactive Pro; and Dan Sandhu, chief executive of education software company Sparx. 

The engaging and informative session drew on myriad views from all corners of the global ed tech market. Panellists agreed it is paramount to ensure ed tech products are teacher-led and don’t offer solutions to problems that don’t yet exist. If they’re not, investment will prove difficult to attract and taking products beyond the bootstraps by scaling nationwide and internationally will become much harder to do, they said. 

Finally, the Beyond Borders stream heard from Daniel Lewis, head of international school services at educational consultants RSAcademics, who outlined the opportunities for UK schools to scale overseas. The reputation of a brand in the UK is not enough to ensure success overseas, he said, adding that “excellence” is key to successfully scaling abroad. “Expats and parents may well take comfort in the British brand, but if the quality of the school is not excellent, it will lose out to competitors,” he said. “The overseas branch has to be excellent, which is what parents expect when paying a premium.” This, he continued, is determined by the head of the school, its staff and the ethos of the overseas branch. 

Drawing the Summit to a close was a keynote speech by Jon Cummins, commercial director at training provider Learning Curve Group, one of our event sponsors. Cummins discussed the ways in which the UK training market has transformed in recent years into a market that should be considered on a par with higher education, but isn’t, largely due to “academic snobbery” that disfavours apprenticeship training. Investors should be bullish on the sector, he added, as regulatory stability has improved since 2017 when the apprenticeship levy was introduced, which helped bring clarity to an overly complicated funding environment.

Posted on: 04/11/2019

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