Permira books 4x on Renaissance Learning

The UK-based firm has agreed to sell the business for $1.1bn to Hellman & Friedman.

Permira, a UK-based buyout firm, will sell its majority stake in Renaissance Learning, to US-based Hellman & Friedman for $1.1 billion, according to a statement.

It is understood that the sale will generate a 4x return for Permira which acquired the US-based business, which provides cloud-based assessment, teaching and learning services, in October 2011 for approximately $440 million. The firm declined to comment beyond the statement.

Permira was approached by a number of private equity groups as well as strategic buyers. There was no formal auction process, according to a source familiar with the matter. The transaction is expected to close in the second quarter of the year.

The firm originally took on an 85 percent stake in Renaissance, but this was slightly diluted last month when Google Capital, the growth investment arm of Google, acquired a minority stake for $40 million last month. Google Capital is expected to remain an investor in Renaissance under Hellman’s majority ownership, according to the statement.

Under Permira’s tenure, Renaissance invested in new product development and from 2010-2013, orders grew 10 percent annually and cash EBITDA increased by 20 percent per year.

Addionally, Permira improved Renaissance’s market position in the UK by helping to achieve 43 percent year over year order growth in 2013 and supported the business in establishing a local partnership in South Korea to expand their presence in Asia.

“By investing significantly in the company’s core products and new product development, cultivating a first-class management team, and forging important strategic relationships, Renaissance has made great strides in strengthening its position and increasing its impact on K-12 students,” Nic Volpi and Brian Ruder, partners at Permira, said in the statement.

“We believe strongly in the mission and are excited to help grow Renaissance’s impact globally through continued investment in products that make a difference in the classroom,” Tarim Wasim, a managing director at Hellman & Friedman, said.

Permira acquired Renaissance with capital from Permira IV. Following its exit from ProSiebensat in January, it is understood Permira had returned 60 percent of P4 to investors and was valued at 1.5x. The firm has previously indicated to LPs that it expects the vehicle to ultimately return at least 1.8x.

The divestment of Renaissance comes shortly after Permira reached its €5 billion hard-cap on its new fund, Permira V, PEI exclusively reported last month.

The firm has stopped fundraising and is currently in “execution mode”, finalising all the necessary paperwork ahead of a final close, the sources said. This process could take until April, one added.

Permira will put in a GP commitment of between €200 million and €300 million on top of the €5 billion, which will potentially take the final fund size up to €5.3 billion.