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Cambridge Education Group sold to Bridgepoint Capital

UK-based Cambridge Education Group has sold a majority stake to a US-based private equity firm, Bridgepoint Capital, it was announced today, for an enterprise value of UK£185 million. The new owners have continued international expansion in their sights.

"We have taken CEG from being a small UK platform to a market leading brand"

Ex-owners, Palamon Capital, acquired CEG in 2007 and achieved an acquisition multiple of 11 times the current year trading forecast (EBITDA).

Chris Busby, the partner responsible for Bridgepoint’s investment activity in the UK, commented, “Cambridge Education Group has grown substantially, extended its teaching, targeted new markets and importantly, delivered strong academic results.

“Our investment will provide the team with additional financial capacity and reach to accelerate its push further into international markets and realise its ambitions in a growing market.”

During Palamon’s ownership, CEG has grown revenues five-fold to an estimated £90 million for the academic year 2013-14. This growth has been exclusively organic, said the company in a statement, as the management team expanded its teaching capacity, signed on new sites and focused on providing the highest standards of education to its primarily international customer base.

It built in-roads into Europe and the USA with expansion in Boston and the Netherlands, including a recent acquisition of Boston Academy of English.

Fergus Brownlee, Chief Executive of CEG, noted: “We are delighted with what we have been able to achieve during the past seven years with the close and supportive collaboration of our partner, Palamon. We have taken CEG from being a small UK platform to a market leading brand with an international presence and are now looking forward to working with Bridgepoint to capture the next stage of growth.”

Now using the strapline “The Global Education Specialists”, Cambridge-based CEG operates brands CATS (independent high schools); CSVPA (specialist creative arts education); Stafford House (year-round and seasonal ELT provision); and FoundationCampus, (university pathways).

In 2007 CEG taught 460 academic students per year across two campuses in Cambridge and Canterbury

Palamon originally sourced its investment in CEG directly from the founding team of Nick Golding and Elizabeth and Ann Armstrong in 2007. At that time CEG taught 460 academic students per year across two campuses in Cambridge and Canterbury. Its pathways operation, preparing international students for degree-level study, is an area that attracts considerable interest from private equity firms.

Ian Koxvold, a partner at strategy consultancy, Cairneagle, commented, “The pathways sector has delivered remarkable growth and profitability over recent years. Strategically the space is exciting – there are five clear leaders in the space, with material differences between each firm’s market positioning.”

He continued, “The price that Bridgepoint has paid is a full one, premised on the continued growth of international education, penetration of the US, and CEG’s ability to evolve to meet changing needs as the mass-market drags average pricing downwards. One interesting question is whether other players can disrupt this market by disintermediating the pathway firms and/or the agents.”

Today, CEG teaches over 3,000 academic students and thousands of short-term English language students each year across its four divisions in three countries. In excess of 75% of CATS students gain entry into top ranked universities each year.

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4 Responses to Cambridge Education Group sold to Bridgepoint Capital

  1. It will be interesting to see how successful a financial acquirer can be with a company such as Cambridge. When we sold ELS Language Centers in 1997 we were looking for a strategic buyer and were very pleased with the one we found–someone who really understood our business.

    • The purchase price of 11 times EBITDA can definitely not be called a bargain and shows the confidence in a continous strong growth. Obviously a financial acquirer is under higher pressure than a strategic one, as an exit on a 2-3 multiple on this investment will be a tough job.

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