This article is a part of a new series in which this publication extracts insights from executives, partners and thought-leaders across the education investment landscape, illuminating developments in a fast-moving market environment
A UK-based training organisation set to come to market has expanded enrolments throughout the pandemic and “almost doubled” its revenue during a period in which Covid-19 decimated the apprenticeship sector.
The coronavirus crisis prompted the UK government to close down training centres in March, making it difficult – impossible, in some cases – for many apprenticeship providers to fully deliver courses. Meanwhile, several industries which rely heavily on apprentices – such as hospitality, retail and leisure – effectively went into hibernation due to widespread furloughs, resulting in reduced demand for workplace training.
As a result, apprenticeship starts – the most widely tracked industry metric – were down 60% in May, while many providers of centre-based training saw their balance sheets crippled by the coronavirus.
But Corndel, which offers high-level online training programmes to staff at blue-chip corporations, now has 3,500 learners – up 16% from January, when it had 3,000 – chief executive Sean Williams told this publication. If it was not for the coronavirus, said Williams, Corndel would have enrolled 4,500 learners by now.
The firm, founded just three years ago in response to the introduction of the apprenticeship levy, has “practically doubled” its revenue from £13 million last year to over £20 million this year, according to Williams. Corndel is expected to deliver annual EBITDA of nearly £4 million this year, it is understood.
Corndel – whose clients include BUPA, Aviva and Capita (which is set to offload its education software solutions unit) – employs more than 200 staff, up from around 100 last year, and 50 the year prior, said Williams.
The growth spurt comes ahead of an auction of Corndel that corporate financiers at Lincoln International are expected to launch later this year. A prospectus for the business, which hitherto has been bankrolled by around 35 enterprise investment scheme investors, will likely be circulated in September, Williams confirmed.
Asked what he is looking for in a buyer, whether that be trade or private equity, Williams said: “We’re looking for anyone who shares our ambitions around growth and our ruthless focus on quality.”
By 2024, Corndel aims to become a £100 million business under what Williams calls “phase two” of its growth plan, which will see it diversify into a range of new segments. These will include ‘recruit, train, deploy’, a model by which training providers hire and coach prospective employees then place them in jobs, skimming a portion of their salary over an agreed period. It is particularly popular among IT training providers and organisations.
Corndel’s core apprenticeships business – currently specialising in software development, data analytics and leadership training courses – will grow its revenue from around £20 million to £45 million over the next three years, said Williams, reaching £60-70 million by 2025.
An additional £30 million in sales will come from Corndel’s partnership with staffing giant Adecco, under which it places 100,000 unemployed people in work each year, said Williams. Government-funded training contracts set to be introduced as part of the UK’s economic recovery plan, drafted by chancellor Rishi Sunak, will also contribute to this revenue tranche, as will increased sales from commercial training, he added.
As part of efforts to stave off mass unemployment, Sunak said that the Treasury will pay employers £2,000 for each new apprentice under 25, and £1,500 for each over that age, channelling public funds into privately owned training providers.
“We’re about to move into an economic crisis, the likes of which we have never seen before,” said Williams. “Skills – and subsequently providers of high-quality training like us – will be a huge part of the solution to that.
“The government is going to be spending so much more money on training over the next few years, as the skills of the past are not the skills people will need in the post-Covid future.”
Williams said that the pandemic had not hindered Corndel, whose digital delivery model was “90% online” at the start of the crisis but has “now transitioned to 100%”, removing entirely co-located provision. Whether this will outlast the pandemic depends chiefly on feedback from clients, which so far has been “fantastic”, he said.
Williams attributed Corndel’s growth this year to his start-up’s “agile” business model. It enabled Corndel to “respond quickly to the fast-changing demands of the market”, embellishing its courses with Covid-19-focused modules and delivering online-only training to furloughed staff members at FTSE 250 organisations, he said.
For example, into its Level 5 management training diploma Corndel baked modules on remote working and managing decentralised teams from home, as well as juggling childcare and corporate responsibilities.
The company also provided training in fields such as software development to workers who had been placed on furlough, providing a productivity boost to otherwise idle employees.
He likened the ability of Corndel to “tailor training to meet the demands of employers in the new world” to that of software developers, which in response to Covid-19 quickly launched solutions to pandemic-specific problems, such as apps facilitating table ordering in socially distanced bars.
Williams added that the UK apprenticeship system – often criticised for inefficiencies relating to the creation of ‘standards’, sector-specific skillsets – affords providers with “sufficient flexibility” to deliver “innovative” training, while allowing employers to implement bespoke courses finely tuned to their needs.
A proponent of the apprenticeship levy – essentially a monthly tax on large corporations to fund workplace training – Williams said: “Often, providers are critical of the system due to their own internal inflexibility.
“All training businesses need to be agile. The new system puts employers in the driving seat – and we need to be able to respond to their fast-changing needs.”
Not all training providers were able to move with the coronavirus times, however.
In May, EducationInvestor Global exclusively reported that the sale of Lifetime Training by its private equity parent Silverfleet Capital had been abandoned after lockdowns hammered the finances of the centre-based provider, whose clients operate within leisure, retail and hospitality – three of the hardest hit sectors.
Meanwhile, the apprenticeship levy requiring employers with wage bills in excess of £3 million to set aside 0.5% of salary costs each month has increased flexibility around the kind of training employers can implement but has failed to boost apprenticeship starts.
Asked whether he is concerned about selling Corndel’s success story to suitors against a backdrop in which starts are down significantly and some providers are being pushed to the brink, Williams said: “I think it makes Corndel stand out even further, because, at a time when so many other organisations are moving backwards, we’re moving forwards.”
Date published: 19 August 2020