A group of private equity-backed schools in London has been acquired in a deal worth more than £75 million, EducationInvestor Global can reveal.

This publication has learnt that Dukes Education, a UK-based operator of more than 20 independent schools and nurseries, has agreed to purchase Eaton House from its private equity parent Sovereign Capital.

According to two well-placed sources, the transaction values Eaton House in the region of £75-£80 million.

EducationInvestor Global last month revealed that Sovereign Capital had instructed LAVA Advisory Partners, a new M&A boutique, to find a buyer for its controlling stake in Eaton House, a cluster of five schools and nurseries in London’s Belgravia and Clapham districts.  

The deal will expand Dukes Education’s footprint in London and lift its number of education brands to 22.

Last month, this publication reported that Sovereign Capital was targeting an enterprise value north of £90 million for Eaton House – equal to around 19-times its 2020 earnings before interest, tax, depreciation and amortisation (EBITDA) of £4.8 million.

However, a corporate finance source told this publication that Dukes Education and Sovereign Capital “didn’t get near” the £90 million price tag, and two insiders confirmed an enterprise value in the “high seventies” had been agreed.

Sovereign Capital took control of Eaton House in 2016, when it executed a leveraged buyout of the group using debt provided by Permira Debt Managers.  

Dukes Education was established in 2013 by Aatif Hassan, chairman, a former private equity investor who before moving into the education sector was a partner at mid-market buyout group August Equity. The organisation is backed by Hassan and a number of long-term investors including the UK university sector’s largest pension fund, USS. Alongside Dukes Education, Hassan also set up Cavendish Education, a group of 11 for-profit schools that cater primarily to students with special educational needs (SEN), in which he is the largest shareholder.

Dukes Education has made a number of acquisitions this year.

In March, EducationInvestor Global reported that Dukes Education had acquired St Andrew’s College in Cambridge; Chiswick & Bedford Park Preparatory School in West London; and Hampton Court House school in Southwest London.

The firm also snapped up The Career Portal, a career pathways consultancy, bolstering its university applications consultancy division, which also encompasses Oxbridge Applications and A-List.

The sale of Eaton House marks a continuation of consolidation in London’s for-profit schooling market, in which Northwood Schools, another group, is also exploring a sale at present, as revealed by this publication in April.

It marks an exit for Sovereign Capital, which used to own private school operators Alpha Plus Group and Astrum Education, as well as SEN provider Outcomes First Group.

Hassan and Sovereign Capital had not responded to requests for comment at the time of publication.

Date published: 24 June 2021

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