Partners Group, owner of International Schools Partnership (ISP), is weighing a partial or full exit of its majority stake in the global private school operator potentially worth billions of euros, EducationInvestor Global can reveal.

This publication has learnt from three well-placed sources that the Swiss private equity firm, which initially invested in ISP in 2014, has in recent weeks approached investors and banks about selling all or part of its position in the organisation.

Partners Group has directly approached a handful of unidentified long-term funds to discuss offloading a minority stake in ISP.

According to insiders, Partners Group has also held discussions with investment banks JP Morgan and Credit Suisse about potentially launching an outright sale of ISP later this year or early next.

However, a source noted that Partners Group would only be open to relinquishing full control of ISP if at auction it could get 20-times its forecasted earnings of €100 million – €2 billion.

At present, ISP, which owns 46 schools in 12 countries that collectively cater to some 45,000 students, records annual earnings before interest tax, depreciation and amortisation (EBITDA) of around €70 million, a source familiar with the business told this publication.

In June, Singaporean sovereign wealth fund GIC invested €350 million in Inspired Education in a deal that valued the global premium school group at around 20-times its earnings. When Swiss family office Jacobs Holding took control of international school operator Cognita in 2018 for £2 billion, this figure was at the time equal to 26-times the company’s annual EBITDA.

According to a source, Partners Group could “kick off a process this side of Christmas” in which bankers would use run rate metrics, whereby current financials are used to predict future performance, to “try and sell [ISP] as if its EBITDA is €100 million”. Another source, however, said that an auction was more likely to be launched in the first quarter of 2021.

When contacted by this publication, a spokesperson for Partners Group said: “We have not mandated bankers from Credit Suisse (or any bank) to run an auction of ISP.” When pressed for further comment, the press officer added that “we are not in discussions with banks”. Credit Suisse declined to comment. JP Morgan had not responded to a request for comment at the time of publication. As such, an auction of ISP – or a slice of the company – is at this point not guaranteed.

An insider, who described ISP’s portfolio as a “very mixed bag of assets”, said that Cognita, which is backed by family office and private equity capital, could be “interested” in acquiring the organisation.

The sale of ISP, one of the world’s largest international schooling providers, would come at perhaps the most challenging time in the organisation’s seven-year history as it, like all school operators, continues to grapple with the coronavirus pandemic. Lockdowns and in-school outbreaks pose a looming threat to the operations of ISP’s institutions, some of which are situated in countries that have been hard hit by the virus, including the US, Mexico, Peru and Columbia.

According to a Europe-based advisor, Partners Group had “come under pressure” around 12-to-18 months ago to exit ISP as it was “not happy overall” with its financial performance over the six years it has owned a controlling stake in the company. Partners Group initially injected around €200 million into the company in 2014.

Another source based in Asia said that “ISP has been rumoured to be on the block for the past two years, on and off”, adding that “the PE [private equity] behind them invested long ago, so it would make sense that they exit”.

ISP was founded in 2013 by Ryan Robson, a private equity veteran who co-founded London-based mid-market buyout house Sovereign Capital, which has backed several private school operators, including Alpha Plus Group. Robson, who has invested in and served on the board of education groups for more than two decades, is deputy chairman of ISP. It is led by chief executive Steve Brown, who served for five years as chief financial officer of K12 company World Class Learning, purchased by Nord Anglia in 2013.

ISP, which rivals the likes of Cognita, Nord Anglia, GEMS Education and Inspired Education, operates schools across Europe, the Middle East, Southeast Asia, the US, South America, Mexico and Central America.

Date published: 25 September 2020

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