A UK-based buyout house is in exclusive talks with shareholders in Back2Work Complete Training around acquiring a minority stake in the employment training provider in exchange for growth capital, EducationInvestor Global can reveal.

This publication has learnt that corporate financiers from Clearwater International, which is marshalling the share sale, have allowed Palatine Private Equity to enter a period of exclusivity within which to thrash out a deal.

Earlier this month, we reported that Clearwater International had been instructed by Back2Work’s managing director, Luke Muscat, to help “us consider investment in the business from private equity”.

Through its Impact fund, Palatine invests up to £10 million in “innovative, returns-focused businesses that can create a clear positive impact on society or the environment”.

Industries “high on our investment agenda” include education and training, Palatine states on its website. Under its buyout fund, Palatine also owns apprenticeship provider Estio Training and Trade Skills 4U, a provider of training courses to aspiring electricians.

One private equity investor told this publication that Back2Work would be a “good fit” within Palatine’s “ethical investment-orientated fund”.

The value of the deal between Palatine and Back2Work – both of which are headquartered in Manchester – is unclear.

No final accord has been reached and talks could yet fall apart.

When contacted by this publication, Palatine said it was “unable to make any comment”. Clearwater International declined to comment.

Back2Work provides pre-employment training courses in fields such as construction, health and social care, and security. According to its website, Back2Work, founded in 2011, has trained more than 10,000 learners. Telecoms giant BT and foods conglomerate Nestle are listed among its “partners”.

Earlier this month, an industry insider said that Clearwater International, which is also overseeing the auction of e-training provider iHASCO, was “close” to lining up an investor in Back2Work, whose annual EBITDA is being marketed as £2 million, according to sources.
 
Financial statements – which do not include a profit and loss account – filed with Companies House show that in the year ended 31 March, 2019, Back2Work’s net assets were valued at £2.7 million.

If successful, the sale of a minority stake in Back2Work to Palatine would mark a continuation of consolidation within the UK training market despite widespread closures of providers’ centres enforced in response to the Covid-19 pandemic.
 
Since the coronavirus outbreak began in January, several training companies, including iHASCO, have come to market, while others – such as Corndel, the sale of which Lincoln International is launching later this year – are laying the groundwork for auctions.
 
Clearwater International has previously brought to market several training companies, including Learning Curve, The Skills Network and, most recently, iHASCO, which remains in play. 

Date published: 25 August 2020

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