The private equity parent of a UK-based apprenticeship provider has hired corporate financiers to explore a sale of the business in due course, EducationInvestor Global can reveal.
This publication has learnt that Palatine Private Equity, owner of Estio Training, has instructed Clearwater International to work on an auction of the company that could launch later this year.
Palatine Private Equity acquired Estio Training, which specialises in digital and IT apprenticeships, in September 2018 through its £100 million impact fund. Estio Training was the fund’s third investment.
In a statement published July 2019 – pre-coronavirus crisis – Palatine Private Equity said that Leeds-headquartered Estio Training had forecast £20 million in revenue in 2020, driven by growth in enrolments to around 2,500 from nearly 1,300.
Estio Training has centres in Leeds, London, Manchester and Birmingham and employs more than 200 staff. The business is led by chief executive Lee Meadows, who co-founded the company in 2014.
A source stressed that a sale is not imminent, adding that “there’s no definitive timing for a process”.
Estio Training’s current financials are not clear from Companies House filings and Clearwater International is yet to prepare a prospectus for the business, meaning an enterprise value range is difficult to determine at present.
Palatine Private Equity did not respond to a request for comment.
Clearwater International – which also advised on stake sales at Learning Curve, Back2Work (in which Palatine invested) and iHASCO – declined to comment.
A sale of a controlling stake in Estio Training could come at a time when, because of the Covid-19 pandemic, apprenticeships are declining in England. According to government-published figures, between March and July 2020 – when the UK’s first national lockdown was implemented – apprenticeship ‘starts’ plummeted 46% year-over-year.
However, Estio Training operates in the IT sector, in which the impact of Covid-19 has been least severe, statistics show. Health and social care has been the worst-hit industry, with 11,063 (46%) fewer starts. Other sectors badly affected by the pandemic include administration, business management, hospitality and catering, and child development and wellbeing.
Last May, EducationInvestor Global revealed that the sale of private equity-owned apprenticeship provider Lifetime Training had been cancelled due to the adverse effects of Covid-19 on the business, most of whose clients are retail and hospitality companies.
Other sales of apprenticeship providers have been executed, however, despite the gloomy economic backdrop ushered in by the pandemic.
In November, European private equity house THI Investments took control of Corndel, an online apprenticeship provider specialising in software development, data analytics and leadership training, in a £40 million-plus transaction.
In September, Queen’s Park Equity, a new shop set up by two former partners of Sovereign Capital, acquired Learndirect, an embattled training provider that almost went bust in 2018 after having its government funding pulled.
Both deals were revealed exclusively by EducationInvestor Global.
Also in September, private equity firm Apiary Capital invested in Access Creative College, a further education provider, and installed British Prime Minister Boris Johnson’s brother, former government minister Jo Johnson, as its chairman.
Despite significant headwinds spurred by the coronavirus crisis, several private equity-backed operators have consolidated their market positions by hoovering up smaller players.
Learning Curve, an apprenticeship provider backed by Agilitas Private Equity, has acquired two companies – Antrec and Acorn Training Consultants – in the past seven months.
Date published: 19 April 2021