BGH consortium bids $1.4b for Australia's Navitas

This is not the first time BGH has partnered with AustralianSuper, an LP in the private equity firm's debut fund, which closed earlier this year at A$2.5 billion. The superannuation fund was also part of the consortium that bid A$4.1 billion for hospital operator Healthscope in April only to see its offer rebuffed.

AustralianSuper has a 5.4% interest in Navitas and – as was the case with Healthscope, in which it is also a stakeholder – plans to vote those shares in favor of the buyout. Jones has a 12.6% holding in the company and he has agreed to sell half of his shares for cash and roll over the remaining half into the acquisition vehicle.

The consortium is willing to buy all outstanding shares for A$5.50 apiece in cash, a 26% premium to the October 9 closing price, according to a filing. Alternatively, investors can choose to receive A$2.75 per share in cash plus one share in the acquisition vehicle for every two shares they have in Navitas. The number of shares rolled over – excluding those owned by the consortium – cannot exceed 15% of the equity in the acquisition vehicle. As of midday on October 10, Navitas was trading up 21.4% at A$5.28. 

Founded in 1994, Navitas pioneered the "pathway" model, whereby international students complete English language or other academic programs and are then enrolled in higher education institutions in Australia, New Zealand, the US, Canada, the UK, Singapore, and Sri Lanka. The company claims to serve more than 80,000 students through over 120 institutions across 31 countries.

Nearly two-thirds of Navitas' revenue comes through these pathway arrangements. As of June 2018, it had partnerships with 18 universities in Australasia, 10 in North America, and nine in Europe. What Navitas brings to these partnerships is global marketing and recruitment infrastructure: it has over 120 recruitment staff in 20 offices and ties to more than 4,000 recruitment partners.

Meanwhile, the company's careers and industry division operates the SAE chain of media colleges, which offers higher education programs in 51 campuses across 26 countries. In addition, within Australia, it delivers tertiary courses through the government's adult migrant education and professionals skills programs, as well as in association with local colleges.

Navitas reported revenue of A$931 million for the 2018 financial year, down from A$955.2 million for the preceding 12 months. Over the same period, EBITDA shrank from A$155 million to A$82 million and the company swung from a net profit of A$80.9 million to a loss of A$55.3 million. The loss was mainly due to a rationalization of the careers and industry division, including the sale of some SAE campuses.

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• Topics
• Australasia
• Consumer
• Buyouts
• Australia
• Education
• BGH Capital
• AustralianSuper