A US-owned insurance services provider is one of two suitors that have tabled second-round bids for apprenticeship and leadership-training provider Corndel, EducationInvestor Global can reveal.

This publication has learnt from two sources that Davies Group, which is backed by HGGC, a US private equity firm, and AIMCo, a Canadian asset manager, is competing with THI Investments for a controlling stake in Corndel.

EducationInvestor Global revealed in its Rumour Has It newsletter on 20 October that THI Investments, a private equity house based in Germany with offices in London, had hired EY-Parthenon to carry out due diligence as it prepared its latest offer.

Bankers from Lincoln International collected second-round offers on 5 November, sources said, paving the way for either a final leg of bidding or a period of exclusivity within which a selected party could hammer out a final deal.

Queen’s Park Equity, a new mid-market buyout house which in September bought embattled training provider Learndirect, was admitted into the second round, but was “knocked out or dropped out”, as revealed by Rumour Has It on 29 October.

Corndel was launched in 2017 in response to the introduction of the UK apprenticeship levy, which forces large organisations to set aside a percentage of their payroll value to fund workplace training through apprenticeship schemes. It sells high-level apprenticeships and training courses to companies seeking to upskill members of senior management teams using levy funds.

Given that its primary business is selling operations, consulting and technology solutions to the insurance sector, Davies Group will be seen by some as an unlikely suitor for Corndel.

But last September, the organisation acquired FWD Training and Consultancy, a UK-based apprenticeship provider, under plans to expand its ‘consulting and technology’ division to also encompass ‘learning solutions’.

A source familiar with Davies Group’s strategy told this publication that it could see in Corndel an opportunity to bolster its learning solutions unit by consolidating the company’s leadership-training expertise with FWD’s apprenticeship offering.

Acquiring Corndel would widen the scope for Davies Group to cross-sell upskilling services, including management training, to its 500-plus clients in the insurance and financial services industries.

Corndel is no stranger to these sectors: among various blue-chip clients listed on its website are Aviva, BP, Capita, Legal & General, and Liverpool Victoria.

In March, Davies Group finalised its purchase of a minority stake in insurance-focused law firm Keoghs – illustrating its ambitions to buy businesses that are “adjacent to” or complement its insurance services offering, a source said. 

The insider described Davies Group, which has operations in the UK, Ireland and Bermuda, as a “huge organisation” with “significant” cash at hand and annual earnings exceeding £50 million. “It typically does around five deals a year,” the person added.

AIMCo – which stands for Alberta Investment Management Corporation – took a minority stake in Davies Group in January last year, while HGGC has owned a controlling stake in the firm since 2017.

A spokesperson for Davies Group declined to comment. THI Investments had not responded to a request for comment at the time of publication.

In bringing Corndel to market, bankers at Lincoln International sent a prospectus for the business “far and wide”, according to several sources, to more than 30 parties across the UK and Europe.

This publication understands that as many as eight prospective investors – a mix of private equity funds and trade buyers – had been “interested”, but the majority dropped out prior to the first round due to misgivings about pricing.

One source said that Lincoln had initially sought offers of at least £30 million for Corndel, whose annual revenues are expected to reach £24 million this year – despite the coronavirus pandemic.

Lincoln International declined to comment.

Corndel, which is backed by around 35 individual investors who injected capital through the UK’s Enterprise Investment Scheme, hopes to reach £100 million in revenues within the next four years by expanding in the UK and internationally. 

In August, Corndel’s chief executive, Sean Williams, told this publication that the organisation was on course to deliver annual earnings before interest, tax, depreciation and amortisation of nearly £4 million this year. 

At the time, Corndel had around 3,500 learners on its books, Williams said, up from around 3,000 in January.

Corndel’s core apprenticeships business – currently specialising in software development, data analytics and leadership training courses – will grow its revenue from around £20 million to £45 million over the next three years, said Williams, reaching £60-70 million by 2025.

An additional £30 million in sales will come from Corndel’s partnership with staffing giant Adecco, under which it places 100,000 unemployed people in work each year, said Williams.

Date published: 9 November 2020

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