Bain and Prides Capital to invest $60m in Princeton Review(2)

Close on the heels of Apax’s $8 billion May buyout of The Thomson Corporation’s higher education division, Bain Capital Ventures and Prides Capital have agreed to invest $60 million in test prep company The Princeton Review.

US investment firms Bain Capital Ventures and Prides Capital have agreed to buy $60 million (€43 million) of preferred stock in test prep company The Princeton Review, giving the firms a significant minority stake in the $144 million company. 

In conjunction with the deal, Michael Perik will succeed John Katzman as chief executive officer of The Princeton Review. Perik has worked with Bain before; he was chief executive officer of educational publisher The Learning Company, which he co-founded, when Bain, Thomas H Lee Partners and Centre Partners Management bought a 22 percent stake in the company. He also became a director of Houghton Mifflin after Bain, Thomas H. Lee and The Blackstone Group bought the publisher for $1.7 billion.

The Princeton Review, based in New York, offers private tutoring and online preparation, as well as classroom tutoring in 41 states and 21 countries, for college and graduate school admissions tests.

Kevin Richardson, a managing partner at Prides Capital said in a statement that the private equity firms will look to strengthen The Princeton Review’s balance sheet, and make additions to its board and management team.

In the same statement Katzman said his company would use the funds to expand the geographic and product footprint. Bain managing director Michael Krupka also emphasized Bain’s plans to make The Princeton Review “a major international player”.

Private equity firms have acquired a number of educational publishers of late. In May Apax Partners and Canadian Pension Fund Ontario Municipal Employees Retirement System beat out Kohlberg Kravis Roberts and The Carlyle Group for the higher education assets of The Thomson Corporation for $7.75 billion. Also in May Charterhouse Capital Partners bought the UK’s biggest education publishing business, TSL Education, from Exponent Private Equity for an undisclosed amount. Earlier this year, Sterling Capital Partners and Citigroup Private Equity agreed to acquire Educate, a provider of supplemental education products to students in pre-kindergarten through 12th grade, for approximately $545 million. 

Boston- and San Francisco-based Prides Capital focuses on what it calls “private equity-like” strategic block, activist investing in the small- and micro-cap markets. Its portfolio companies include travel technology provider Pegasus Solutions, transportation service Ameritrans Corporation, and diet aid website eDiets.com.

Boston-based Bain Capital, the venture arm of buyout giant Bain Capital, was formed as a separate entity in 2001.