Baring Asia, CPPIB to privatize Nord Anglia in $4.3b deal

The two investors will pay $32.50 apiece for all outstanding shares they don’t already own - an 18% premium to the April 24 closing price - and secure repayment of the company’s debt, according to a filing. The stock gained 17.31% on April 25, reaching $32.40, before it was suspended from trading. Nord Anglia is up 39.1% year-to-date.

Baring Asia still holds a 66.9% stake in the company. The GP owned 93.3% ahead of Nord Anglia’s IPO in March 2014, which saw 19 million new shares sold for $16 each, generating proceeds of $304 million. Baring Asia's stake was diluted to 74.6% and the firm received $61.6 million alongside members of the management team through a partial redemption of preference shares.

Baring Asia had already taken money out of the business via recaps. Nord Anglia raised debt financing on three occasions in 2012 and 2013. The first of these – worth $325 million in March 2012 - was the first time a financial sponsor in Asia has issued a high-yield bond for dividend recap purposes.

Nord Anglia educates more than 37,000 K-12 students through a network of 43 schools in China, Europe, the Middle East, Southeast Asia and North America. When Baring Asia privatized the company in 2008 the majority of its business was in Asia, and China in particular. By 2014, through organic expansion and bolt-on acquisitions, Nord Anglia had tripled in size and achieved more of a geographical balance.

The company posted revenue of $856 million in 2016, up from $573.1 million a year earlier. Net profit rose from $7.7 million to $49.2 million over the same period.

Baring Asia and CPPIB see potential for further long-term growth driven by demand for high-quality private education and ongoing consolidation of a global premium K-12 market in which single-site operators hold a more than 85% share. Nord Anglia is expected to leverage its scale to attract top teaching talent and forge educational partnerships.

“The company, backed by a strong management team, is well positioned to benefit from the rising demand for high quality education in the kindergarten to grade 12 category globally, has demonstrated strong financial performance, delivers stable cash flows, and provides a platform for future growth in this sector,” said Deborah Orida, head of Asia private equity at CPPIB, in a statement.

She noted this is the first direct equity investment in private education for the pension fund, which had C$298.1 billion ($219 billion) in assets as of December 2016. CPPIB is known for its appetite for co-investment and direct investment, in addition to making fund commitments. Baring Asia is one of its portfolio GPs.

The Nord Anglia buyout still requires shareholder approval. Baring Asia originally invested in the company through its third and fourth pan-regional funds. The private equity firm is currently deploying its sixth vehicle, which closed at $3.98 billion in early 2015.

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• Topics
• Greater China
• North America
• Europe
• Buyouts
• Consumer
• Asia
• Baring Private Equity Asia
• Canada Pension Plan Investment Board (CPPIB)
• Education