Galileo Global Education is to acquire Regent’s University London, sparing the private institution from potential collapse after the coronavirus pandemic piled further pressure on its already strained finances.
Galileo – backed by a Canadian pension fund, family office and private equity house – has agreed to acquire Regent’s University, which under the deal will be converted to a profit-seeking entity, joining the European operator’s network of 42 institutions in 13 countries.
The purchase of Regent’s University by Galileo, which was taken over in March by a consortium of investors, is due to be finalised on or before 15 September, it is understood, subject to regulatory approvals and “property matters”. It marks Galileo’s first acquisition since it was bought by Canada Pension Plan Investment Board, Montagu, Tethys and Bpifrance in a transaction revealed exclusively by this publication.
The value of the deal – drawn up during a tumultuous time for a sector rocked domestically by a controversial A-level grading scheme and lockdowns, as well as internationally by travel restrictions – is unclear.
However, according to a source, Regent’s University will be provided with “at least” £20 million in working capital by its new owner. The liquidity boost will tide over the coronavirus crisis, which is expected to weigh heavily on enrolments of international students, who comprise more than 80% of Regent’s University’s intake. Its students hail from nearly 140 countries.
Regent’s University’s financial health was on a downward trajectory before Covid-19 gripped global economies. According to corporate filings, Regent’s University – which currently holds charitable status and is not-for-profit – saw total income fall to £44.3 million from £45.8 million in the year ended 31 July, 2019. Over that period, it lost £541,000, while in 2018, it made £2.5 million.
An internal business review – the first step in a restructuring process – was carried out by a Big Four professional services firm at some point in the past 18 months, it is understood.
Regent’s is one of just a handful of private universities in the UK that has degree-awarding powers, which it was granted in 2012 before becoming a university in 2013, when it changed its name from Regent’s College. Founded in 1984, it is located in Regent’s Park in central London – a prime destination popular among wealthy international students – and offers courses in business, arts and humanities.
Despite being situated at what one source called “an address as good as Buckingham Palace” at the heart of Britain’s capital, it has struggled in recent years to meet recruitment targets due, according to another insider, an “overreliance on international students”.
A source said: “It’s a very good brand but it’s suffered because of its acute dependence on foreign students, many of whom won’t be coming next year due to concerns around the coronavirus.” More than half of Regent’s University’s students come from Gulf Cooperation Council countries, the source added.
According to its 2019 strategic report, Regent’s University said it had recorded “lower-than-expected student numbers in autumn 2018”, noting that “revenue growth has been challenging for the university and remains a priority”.
In its report, the institution said that full-time student enrolments had fallen to 2,309 in 2018/19 from 2,503 in 2017/18 – a 7% reduction likely to be exacerbated this year by travel bans, social distancing and quarantine measures linked to Covid-19.
“The outlook for student recruitment remains challenging in the medium-to-long-term and competition for both UK and international students is fierce,” said Regent’s University in the report. “Growth remains the university’s highest financial priority.”
Despite facing challenges that will be amplified by Covid-19, a well-placed source familiar with Regent’s University said the risks to which it is exposed are “relatively short-term”, adding that “it should be a success story” under new ownership.
Galileo’s chief executive Marc-Francois Mignot Mahon commented: “Following detailed work with the Regent’s management team, we are convinced that we can support them to accelerate the development of Regent’s whilst respecting its heritage and DNA.”
Formerly owned by Providence Equity Partners, Galileo’s network encompasses the Paris School of Business; international drama school Cours Florent; Penninghen, Strate School of Design and Atelier de Sèvres in France; Instituto de Estudios Universitario in Mexico; Macromedia University and PFH University in Germany; Noroff School of Technology and Digital Media in Norway; and Istituto Marangoni in both Italy and the UK.
The sale of Regent’s University marks the second of a distressed higher education asset to an overseas buyer since March, when a nationwide lockdown that forced almost all educational institutions – including universities – to temporarily close was introduced.
In March, Richmond, The American University – which had been teetering on the brink of bankruptcy after its former American benefactor died two years ago – was bought by China Education Group, a Hong Kong-listed operator of universities and vocational colleges in China.
The buyout of Regent’s University also underscores the burgeoning influence of private equity-backed French operators within the UK’s private education market.
La Maison Bleue, one of France’s biggest nursery chains bankrolled by Towerbrook and Galileo stakeholder Bpifrance, gained a foothold in Britain’s early years market last year, when it bought The Old Station Nursery Group.
Grandir, another France-based nursery operator owned by buyout firm Eurazeo, owns UK childcare providers Kiddi Caru and Magic Nurseries.
Date published: 19 August 2020