The owners of Shaw Academy have instructed bankers to kick off a sale of the Ireland-based online education provider after Covid-19 ratcheted up demand for its offering, EducationInvestor Global can reveal.
This publication has learnt from three sources that James Egan and Adrian Murphy, co-founders of Shaw Academy, have handed a mandate to GP Bullhound, the London-headquartered boutique investment bank, to launch an auction of the business later this year.
Insiders explained that Shaw Academy has over the past year been boosted by widespread closures of educational centres and a rise in unemployment, which triggered a surge in demand for online courses delivered via its subscription platform.
One banker, who expects a sale to launch in the coming months, put Shaw Academy’s annual earnings before interest, tax, depreciation and amortisation (EBITDA) at around £10 million.
However, several sources have questioned Shaw Academy’s ability to sustain this figure once the coronavirus crisis subsides and the online learning market cools off.
“It’s clearly in a Covid bubble,” said one advisor. “There’s a lot of uncertainty around the sustainability of its earnings.”
Another banking source said: “It could struggle to prove that its recent growth is sustainable beyond the Covid boom.”
Founded in 2013, Shaw Academy has educated millions of students through courses certified by awarding bodies conducted online via desktops and a mobile application. Sold as software-as-a-service (SaaS), Shaw Academy grants users access to unlimited courses and content in exchange for £49.99 a month.
Last June, Shaw Academy said it had witnessed a tenfold increase in students as a direct result of Covid-linked lockdowns, lifting the Dublin-headquartered company’s revenues and widening its margins.
In August 2020, Shaw Academy was reported to have tripled its headcount to around 340 staff, working at offices in Dublin, Bangalore and Cape Town, tasked with rolling out courses in multiple languages. Egan, chief executive, told the Irish Times that Shaw Academy was attracting “in the region of 1.5 million new students a month” at the time.
Just 18 months prior in January 2019, however, the organisation had encountered financial difficulties after drawing down €4.65 million of a loan provided by Columbia Lake Partners, a venture debt fund, which that month demanded Shaw Academy repay €5.5 million, according to the Irish Times.
The newspaper reported that, after sourcing the debt, Shaw Academy had attempted to raise equity through crowdfunding – but this process ultimately flopped, and revenues started to decline as a result of “insufficient investment” in marketing.
Unable to meet the repayment, Shaw Academy on 9 January 2019 subsequently entered ‘examinership’, a process governed by Irish law enabling companies to restructure – rather than enter insolvency – with permission from the country’s High Court. Examinership is akin to Chapter 11 bankruptcy in the US.
In April 2019, Shaw Academy exited examinership following a cash injection of €7.15 million from former Virgin Group chief executive Stephen Murphy, Setanta Sports co-founder Michael O’Rourke, Folens Publishing, and Beach Point Capital. KPMG Corporate Finance advised Shaw Academy on the fundraise. Other investors in the company include David Brown, co-founder of pathway provider Oxford International, Neil Balnaves, an Australian investor with media experience, and Sean Tai, an education investor, according to the Irish Times.
This publication understands that GP Bullhound will marshal the auction of a controlling stake in Shaw Academy, though it is unclear how many of its shareholders will exit in the event of a successful sale.
Egan, who studied law at university, began his career in capital markets, working for a hedge fund, before founding the Academy of Financial Trading, an online education platform for aspiring traders, in 2012, which later became part of Shaw Academy.
Egan had not responded to a request for comment made via LinkedIn at the time of publication. GP Bullhound’s London office did not respond to a request for comment.
Date published: 18 January 2021