Sovereign books 5.3x on education provider

It is understood Sovereign attracted interest from The Carlyle Group, Investcorp and Providence Equity Partners, but sold WCL to Nord Anglia Education for £153m.

Sovereign Capital, a UK-based buyout firm, has sold private education provider World Class Learning (WCL) to Nord Anglia Education for £153 million. 

The divestment generated a 5.3x return and a 70 percent IRR, according to a statement. It is understood WCL was sold through an auction process and attracted interest from global private equity firms like The Carlyle Group, Investcorp and Providence Equity Partners. Sovereign declined to comment on the details of the sale process. 

Sovereign invested in WCL in 2008, using its £275 million Sovereign Capital Fund II. During its ownership, student numbers rose to 4,500 from 1,700, a 165 percent increase. Sovereign also supported WCL in acquiring an English language school in Madrid, called International College Spain. It also supported the opening of two new schools in New York and Qatar and two campuses in Qatar. 

While the private education sector is reliant on consumer spending, the business did not feel any pressure during the recession, Andrew Hayden, Sovereign’s managing partner told Private Equity International

If somebody has chosen to give their child a private education, they normally can afford it. It’s probably the last thing they are going to stop spending money on, so we believe that if the quality of the school is good, and the education is good, then the earnings become quite resilient

Andrew Hayden

“If somebody has chosen to give their child a private education, they normally can afford it. It’s probably the last thing they are going to stop spending money on, so we believe that if the quality of the school is good, and the education is good, then the earnings become quite resilient,” he said.  

In addition, the target audience of WCL is quite diverse, he indicated. “These are English schools with English headmasters but in foreign countries. That offering was both attractive to the expat community but also to the locals. In Chicago, most of the [students at the] school [are] US nationals who want an English offering,” he said. 

The divestment of WCL, (which means Sovereign has sold seven companies in the last 18 months), paves the way for the launch of a new fund, which will have a £300 million target and is expected to come to market in March 2014, Hayden said. “We are well positioned and hopefully we will get a good reception next year,” he said. 

Sovereign, which invests up to £50 million in businesses in the healthcare, education and training and business support services sectors, plans a number of further exits this year, as well as investments, Hayden said. The firm is currently investing its Sovereign Capital Fund III, a £300 million 2010 vintage, which is about 60 percent deployed. Earlier this year, the firm expanded its deal team when it hired a former Duke Street executive.