Oakley Capital and NMN Cap, the family office of Inspired Education chief executive Nadim Nsouli, are to sell their controlling stake in a group of private universities, EducationInvestor Global can reveal.

This publication has learnt that the growth-focused private equity house and NMN Cap (formerly Educas) have instructed bankers from Rothschild & Co to explore an auction of ACE Education.

The firm encompasses three France-based higher education brands – AMOS Sport Business School; CMH, which specialises in hospitality degrees; and ESDAC, a design school. Across 20 campuses in 15 cities in France and the UK, the institutions collectively enrol more than 4,000 students.

A sale of ACE Education would mark further consolidation within Europe’s private higher education market, in which a number of deals have closed this year, despite myriad pressures stemming from the Covid-19 pandemic.

Touted by Rothschild under ‘Project Goal’, ACE Education was established in 2017 by the acquisition of AMOS, whose founder, Patrick Toiti, has a minority stake in the parent business. “Up to 100% of the business could be sold, depending on the buyer,” a source said.

Rothschild declined to comment.

Oakley Capital and NMN Cap took control of AMOS three years ago with the goal of consolidating France’s fragmented higher education market, in which there are several private equity-owned universities. Galileo Global Education is owned by Tethys Investments, Montagu Private Equity, a Canadian pension fund and the family office of cosmetics giant L’Oréal. Cinven owns French business school INSEEC.

Following the acquisition of AMOS, ACE Education’s shareholders began to execute its buy-and-build strategy, acquiring CMH in 2018 and ESDAC in 2019.

According to sources, ACE Education’s annual earnings before interest, tax, depreciation and amortisation (EBITDA) are projected to this year reach €14 million.

Oakley Capital and NMN Cap are understood to be seeking a deal that would value ACE Education at around €200 million – equal to more than 14-times its forecasted 2020/21 EBITDA. For context, when Cinven paid around €800 million for INSEEC last March, this price represented 14-times its annual earnings.

In ACE Education, an acquirer would see an opportunity to leverage the platform and its brands to expand its reach in France and internationally, through acquisitions and organic growth, within employment-orientated sectors.

A takeover would not be absent of challenges, however. The operations and finances of universities worldwide are under constant threat from the coronavirus, which has hampered face-to-face instruction and sparked widespread demands for tuition fee refunds. One of ACE Education’s universities, CMH, which has around 300 students at its two campuses in France and the UK, offers degrees in hotel management, luxury branding and tourism – sectors which have been decimated by the pandemic.

AMOS, with 11 campuses in France and London catering to more than 2,500 students, is the largest asset in ACE Education’s portfolio. ESDAC has seven campuses that enrol around 1,200 students.

It is understood that Nsouli, a former private equity partner, can no longer allocate to ACE Education the strategic bandwidth it requires because he is focused on running and expanding Inspired Education, the €3 billion school group he founded. When contacted by EducationInvestor Global, Nsouli declined to comment.

Nsouli, whose investment vehicle NMN Cap launched as Educas in 2013, has a long-standing relationship with Oakley Capital. The fund, which specialises in buying slices of fast-growing firms, was an early investor in Inspired Education, which it exited earlier this year when Singaporean wealth fund GIC poured €350 million into the organisation.

Oakley Capital also owns stakes in a number of other European education companies, including Germany’s Career Partner Group, a private higher education provider, and Schülerhilfe, an after-school tutoring business with centres across Germany and Austria.

Oakley Capital declined to comment.

Despite universities facing significant challenges and uncertainty stemming from the pandemic, a number of private higher education institutions have this year changed hands.

Last month, Galileo Global Education bought loss-making Regent’s University London in a deal that will convert the charitable institution to a profit-seeking entity under its new ownership, which has been condemned by a former vice-chancellor.

In April, a Chinese investment group spared Richmond, The American International University from bankruptcy when it acquired the ailing private institution.

Meanwhile, deal-makers are preparing for the return to market of private equity-owned BPP University, as consolidation within the UK’s private higher education sector – in which sport-focused UCFB is also up for sale – gathers pace.

Date published: 28 September 2020

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