An affiliate organisation of Capita- and state-owned AXELOS has lined up private equity support that would bankroll a takeover of the professional-qualifications provider worth hundreds of millions of pounds, EducationInvestor Global can reveal.

AXELOS, which is co-owned by London-listed outsourcing giant Capita (51%) and the British government (49%), was brought to market by Barclays, which collected first-round bids for the firm at the end of April.

This publication has learnt that PeopleCert, a Cyprus-headquartered affiliate of AXELOS and the latter’s exclusive examination institute, has progressed into the second bidding round, in which up to six suitors – comprising a mix of trade and private equity investors – are understood to be participating.

AXELOS develops, manages and operates professional qualifications and certifications in methodologies formerly owned by the British Office of Government Commerce. Its portfolio of qualifications had historically been managed by private-sector provider APMG. But in April 2013, Capita won a government contract that required it to invest in a joint venture alongside the Cabinet Office. This co-investment birthed AXELOS in July 2013.

PeopleCert is a certifications provider with offices across Europe and the Middle East. Professionals undertaking AXELOS qualifications sit exams at PeopleCert’s testing centres.

Led by chief executive Byron Nicolaides, PeopleCert is less than half the size – by measure of sales – than AXELOS, for which investment bankers are targeting an enterprise value of up to £450 million, sources say. AXELOS records annual earnings before interest, tax, depreciation and amortisation (EBITDA) of around £30 million.

Despite being far smaller than AXELOS, PeopleCert is understood to have secured a debt-and-equity package from an unidentified private equity house, with which it is plotting a deal that would see the two organisations come together in a vertical merger. The buyout group would take an equity stake in the joined-up entity.

“AXELOS and PeopleCert have a very important commercial relationship,” said an investment banker familiar with both companies. “PeopleCert believes its position is strong because it is AXELOS’s prime examining institute and plays an important role in the supply chain. The two firms are very involved with one another.

“Notwithstanding this, I’d say a deal is optimistic.”

A private equity-backed combination of AXELOS and PeopleCert would exploit economies of scale by removing a financial barrier between the two organisations, which have been closely intertwined since January 2018, when PeopleCert was appointed the sole examination institute.  

PeopleCert has deep links with the private equity industry.

The company’s corporate development director, Petros Lampropoulos, who oversees M&A and acquisition growth strategies, has a career steeped in private equity. Lampropoulos was most recently a fund manager at Piraeus Bank, a Greek financial services firm, where he established its private equity and venture capital group and launched four funds. Prior to this, he was with Prufrock Investments, a private equity joint venture specialising in real estate investments and leveraged buyouts. When contacted by EducationInvestor Global, Lampropoulos said that “PeopleCert cannot comment on market rumours or speculations”.

Meanwhile, PeopleCert board member and director Maury Shenk has more than a decade’s experience in private equity as a lawyer. Shenk is general counsel at Spring Capital, founder and managing director of consulting firm Lily Innovation Advisors, and advisor to law firm Steptoe & Johnson, where he was formerly London managing partner.

Spokespeople for Barclays and Capita, which in December sold its Education Software Solutions division to Montagu Private Equity, declined to comment.  

Date published: 17 May 2021

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