PEP raises continuation fund for New Zealand's Up Education

AlpInvest Partners is the lead investor in the fund, while additional commitments came from a group of predominantly global institutional investors. Up Education was the last remaining asset in PEP’s fifth private equity fund, which closed on AUD 2.1bn in September 2015.

“Up is a great business, which we’ve scaled to become one of the leading private education platforms in this part of the world,” said Shannon Wolfers (pictured), a managing director at PEP.

“During our ownership, we’ve invested heavily in the student offering and grown three-fold, delivering strong returns for our investors. We are enthused to continue investing in the business through the next growth phase.”

Most LPs opted to realise the investment – typical for single-asset continuation deals – and exited with an approximately 3x return. Alex Ovchar, a managing director who leads PEP’s partner and client group, added that it felt prudent to offer exiting LPs a liquidity option after seven years. “We believe it was a win-win: existing investors could stay on the journey with us or realise liquidity now,” he said.

Evercore, which advised on the deal, declined to comment.

Up Education is New Zealand’s largest private education provider, serving around 23,000 students each year. It employs 1,200 staff across 50 campuses in 15 locations in Australia and New Zealand.

The vocational education offering comprises hundreds of programmes tailored to different industries. These are delivered through specific institutions such as Builders Academy Australia for construction, Acknowledge Education for community services, ICHM for hospitality, New Zealand Tertiary College for early childhood education, and Cut Above Academy for hairstyling.

Up Education also providers pathway programmes through which international students can transition to English speaking universities in New Zealand and Australia.

The company was one of two business divisions that made up Academic Colleges Group (ACG), which PEP acquired for a reported NZD 500m (USD 328m). Within four years, the larger K-12 education division had been sold to global private school operator Inspired Education Group. PEP recovered its principal on that divestment alone.

Up Education’s subsequent growth has been driven in part through M&A. The continuation fund includes a portion of new capital to support future bolt-on acquisitions.

The successful launch of the continuation fund means PEP’s fifth fund is now fully realised. Returns on each of the eight investments range from 1.7x to 4.1x. The firm is currently deploying Fund VI, which closed on AUD 2.5bn in 2020.

PEP made its first foray into the continuation fund space in late 2021 with Intellihub, the debut investment under its secure assets strategy, which focuses on businesses that generate infrastructure-like annuity income yet offer opportunities for PE-style operational improvement.

Over the course of a four-year holding period, the smart metre provider was not only being de-risked – the company had scaled significantly – it was also becoming core infrastructure. Brookfield Asset Management bought a 50% stake at an enterprise value of AUD 3.2bn and the other 50% was transferred into a single-asset continuation fund. PEP’s return was 5.2x.

Other Australian GPs have also explored the structure. For example, Quadrant Private Equity has raised a AUD 255m single asset continuation fund – anchored by existing LPs Future Fund and Roc Partners – for automotive after-market services provider MotorOne at the end of last year.

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• Topics
• Australasia
• Secondaries
• GPs
• LPs
• Consumer
• Secondaries
• New Zealand
• Education
• Pacific Equity Partners
• AlpInvest Partners N.V.