Northwood Schools, a cluster of private institutions in London, has been acquired by one of the City’s largest for-profit operators, which has also snapped up a 29-acre property from Britain’s Ministry of Defence, EducationInvestor Global, can reveal.

EIG has learnt that Dukes Education is on the cusp of closing a deal to acquire Northwood, comprising four schools – Broomwood Hall Lower school, Broomwood Hall Upper School, Northcote Lodge and Northwood Senior – in Southwest London.

Dukes is understood to have fended off competition from Partners Group-backed ISP, which is understood to have participated in numerous rounds of bidding in a process overseen by PwC.

A deal between Dukes and Northwood, the financial terms of which are unclear, is expected to be announced this week, sources said.

Dukes will acquire the freehold properties of Northwood’s schools, it is understood, while other suitors are understood to have contemplated offers under which the property portfolio would be exited via sale-and-leaseback arrangements.

The transaction will expand Dukes’ footprint in the British capital, cementing its position as perhaps the largest London-focused private school operator, with 40 sites – including nurseries – under 25 brands that collectively cater to more than 7,000 students.

It will complement Dukes’ foothold in Southwest London, which was strengthened earlier this year with its £75 million-plus purchase of Eaton House, a group of prep schools in and around Clapham, from Sovereign Capital, as revealed exclusively by EIG. ISP was also the underbidder on Eaton House, as reported.

PwC marketed Northwood’s annual adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) as around £4 million, sources said. Filings with Companies House show that, for the year ended 31 August 2020, Northwood booked an operating loss of £59,332, down from an operating profit of slightly over £1 million a year prior. Over this period, turnover contracted to £14.7 million from £16.1 million.

Corporate financiers familiar with the sector placed Northwood’s enterprise value in the region of £50-60 million, based on an EBITDA multiple of up to 15-times.

When EIG exclusively reported in April that Northwood was slated to come to market, a representative of its majority-owners, Sir Malcolm and Lady Katharine Colquhoun, contacted this news service to rubbish the story, claiming it was “untrue” that a sale was under consideration. “They are exploring options related to the schools’ properties,” the person said at the time, stressing that PwC had “not been appointed”.

Meanwhile, Dukes is also understood to have acquired Kneller Hall, a Grade II-listed, 29-acre mansion located in the London borough Richmond upon Thanes, for an undisclosed price. Kneller Hall army barracks currently houses the Royal Military School of Music, training musicians for the British Army.

It is understood that the group will transfer students enrolled at Dukes-owned Radnor House, Twickenham, to Kneller Hall in September 2023, once refurbishments have been completed.

According to reports, property consultancy JLL was mandated by the British Ministry of Defence to find a buyer for Kneller Hall.

Dukes was founded by Aatif Hassan, a former British army officer and private equity investor, in 2015. Hassan, who chairs and has a significant stake in Dukes, also founded and owns Cavendish Education, a group of 11 private schools for children with dyslexia and autism.

Dukes declined to comment when contacted by EIG.

Date published: 20 September 2021

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