Providence goes to Study Group

Other contenders, including Apollo Global – a JV between the Carlyle Group and US higher education provider Apollo Group – and Bain Capital, as well as vocational education provider Kaplan Professional, apparently dropped out of the auction.

CHAMP bought Study Group from the UK’s Daily Mail Group in 2006 for A$176 million ($157 million), which makes them a net profit of A$424 million, or 2.4x. In January this year, the firm was considering an IPO but uncertain conditions in the Australian public markets, and a number of underperforming or abortive private equity-backed listings apparently drove CHAMP to take the sale route instead.

Study Group originated in the UK, growing out of the Embassy language school in Hastings, Kent, and subsequently expanded in Australia, the US and elsewhere. It operates 38 campuses and tuition services on 5 continents with 2000 staff.

Notwithstanding its global footprint, Study Group is noted as a provider of educational services in Australia for overseas students, especially from high-growth markets in Asia. In Australia, it operates through Martin College and Taylors College, in partnership with Charles Sturt University, Monash University, and the Universities of Sydney and Western Australia.

The rich potential of educational services for overseas students in Australia and elsewhere may help Providence overcome the usual concerns of lower returns and prospects for secondary buyout assets. The Australian government has just finished its ten-year review of the Education Services for Overseas Students Act 2000, recommending “changes designed to ensure Australia continues to offer world-class quality international education.” At end March 2010, according to Australian government figures, Australia had almost 433,000 enrolments by full-fee international students, and enrolments have been growing at over 11% a year since 2002. China accounts for almost 28% of all enrolments, with India contributing 16.7%.

Furthermore, Providence has the global network to support Study Group’s other international operations. Providence’s education investments in the US include Archipelago Learning, Edline and the Education Management Corporation.

Credit Suisse and Deutsche Bank have been advising Study Group on the deal.

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• Topics
• Australasia
• Buyouts
• Secondaries
• Consumer
• Providence Equity Partners
• CHAMP Private Equity