A publicly listed investment firm has instructed bankers to explore a sale of a European higher education group that could fetch upwards of €350 million, EducationInvestor Global can reveal.
This publication has learnt that Paris-listed Eurazeo has hired Rothschild & Co to oversee an auction of Sommet Education, a Switzerland-based premium hospitality education provider with campuses worldwide.
Sommet Education encompasses three institutions: Glion Institute of Higher Education and Les Roches, both in Switzerland; and Ecole Ducasse in France. The brands have offshoots in the UK, Spain and China.
An auction of Sommet Education is expected to launch this year, an insider said – continuing a spate of private equity-driven consolidation in Europe’s for-profit higher education market.
Eurazeo, which is quoted on France’s primary bourse, acquired Sommet Education from US-listed Laureate in 2016, when the company’s enterprise value – not including Ecole Ducasse, which was a bolt-on acquisition – was 380 million Swiss francs (£299 million). Eurazeo invested 248 million Swiss francs in Sommet Education, while Intermediate Capital Group provided acquisition debt totalling 170 million Swiss francs.
Sources familiar with the business told this publication, on the condition of anonymity, that Eurazeo’s annual earnings before interest, tax, depreciation and amortisation (EBITDA) total around €30 million.
Two corporate financiers suggested that Eurazeo could target a price-to-earnings multiple of 10-14 in calculating Sommet Education’s enterprise value – meaning a takeover could be worth more than €350 million at the upper range.
The instruction to sell Sommet Education adds to a flurry for-profit higher education mandates secured by Rothschild & Co, which is also working on stake sales at Talis Education, Global University Systems (GUS) and ACE Education.
A spokesperson for Rothschild & Co declined to comment on its role in relation to Sommet Education.
Eurazeo failed to respond to numerous requests for comment.
An investment banker told this publication that Eurazeo bought the Swiss assets that comprise the majority of Sommet Education “on the rebound” after losing to Galileo Global Education in a race to acquire Studialis, a French higher education platform.
“They [Eurazeo] rushed on the rebound to buy [Glion Institute and Les Roches] and paid a pretty full price equal to what was, at the time, a pretty full multiple of around 14-times EBITDA,” the banker said.
In June 2019, Eurazeo executed Sommet Education’s only bolt-on acquisition of Ducasse Education, founded by legendary French chef Alain Ducasse and rebranded as Ecole Ducasse, in which it took a 51% stake for an undisclosed sum.
Established in 1999, Ducasse Education offers initial and professional development training programmes, in addition to courses for people looking to change careers. It has three schools in France, as well as a presence in the Philippines, Brazil and the United Arab Emirates. The business welcomes more than 800 students and 3,000 apprentices at its three campuses, the company said in a statement announcing its takeover by Sommet Education.
Across the group, Sommet Education enrols students from more than 100 countries, according to its website.
One banker familiar with the business said it is “heavily exposed” to the international student market, at a time when the Covid-19 pandemic continues to cause “major uncertainty” around overseas travel and studying abroad.
“It could continue to be a tough market for some time,” the banker added. Another deal-maker said: “I know some schools in Switzerland that are on their knees because of Covid. The international market is really tough right now.”
Between 2000 and 2004, Laureate – which back then traded as Sylvan Learning Systems – built up its portfolio of hospitality schools through piecemeal acquisitions, the cost of which totalled less than $100 million, an analysis of stock market filings shows.
Based on these sums, Laureate returned more than four-times its initial investment when it sold the assets on which Sommet Education has been built to Eurazeo in 2016.
Eurazeo also backs French nursery operator Grandir, which hs a presence in the UK through its subsidiary Kiddi Caru Day Nurseries.
Date published: 15 April 2021