You’re reading Value Add’s weekly briefing, the leading newsletter for the operating side of private equity. Here’s what you need to know this week, from insights for PE-backed executives and portco news to recent buyouts and investment trends. 

Insights

Chart of the Week: Carlyle’s portfolio operations team stands out for its extensive industry experience. On average, Carlyle’s operating executives bring 34 years of professional expertise, with 29 years specifically in industry roles. In contrast, a managing director at KKR Capstone typically has 21 years of experience, of which only three are industry-based. This highlights Carlyle's emphasis on deep industry tenure in its executives, whereas firms like KKR and Blackstone show more openness to hiring professionals with diverse backgrounds, including MBB consulting or private equity investment experience. (Read More)

More Insights

• The Unexpected Impact of Family Offices on PE Portco Operations (Read)
• Are PE-Backed Companies More Likely To Go Bankrupt? It’s Complicated. (Read)
• Apollo: “You Can’t Talk in the ESG, Alphabet-Soup Jargon” to CFOs (Read)
• Exits Are More Sensitive to Interest Rates Than Buyouts (Read)
• History Shows Interest Rates Alone Have Marginal Impact on Buyout Activity (Read)

Spotlight

EQT’s curriculum. EQT has formed a consortium with the Canada Pension Plan (CPP) Investment Board and Neuberger Berman’s private markets group to buy a majority stake in Nord Anglia, an international private school operator with schools in over 30 countries. 

The deal values Nord Anglia at $14.5 billion, with the total equity put forth by the consortium amounting to about $10 billion. It is possible that more investors join the consortium in the weeks to come. 

CPP is reinvesting a portion of its existing minority stake, while Neuberger Berman is a newcomer to the asset. EQT inherited the asset in 2022 after it spent $7.5 billion to acquire Barings’ Asian private equity unit. Barings initially invested in the asset in 2008, taking it public in 2014 and then took it private again in 2017 with CPP, valuing the business at $4.3 billion.

Nord Anglia is not EQT’s only exposure to education – the asset manager has a long history EQT has a long history in the sector, with existing assets including Codemao, EC Council, ILA Vietnam, VUS English Centers, Wall Street English, IMG Academy, and Universidad Europea (acquired earlier this year).

EQT has also exited multiple education assets: AcadeMedia, Long Spring Education Group, itslearning, and Touhula. 

The road to IPO. Of those four exited assets, half went public:

• In 2016, AcadeMedia successfully IPO'd on the Nasdaq Stockholm. EQT divested the following year. 
• In 2021, Long Spring became First High School Education (FHSE) group on the NYSE, with its shares closing 12% below its IPO of $10. 

According to former EQT partner Martin Mok, this was no coincidence, telling Finance Asia in 2018 that, “We [EQT] have experience in managing education-related firms and taking them public, which is the ultimate goal for [Long Spring].”

However, Long Spring’s IPO was disappointing, and the trend recently for private equity companies has been to take public education companies private – not the other way around. This, combined with a softened IPO market, may explain why EQT chose to double down on its private investment by creating a consortium rather than risk a less-than-stellar foray on to the stock market.

Lessons learned? Overall, the education sector shows a great deal of promise for growth. Morgan Stanley estimates that the global education sector will grow to $8 trillion in market cap by 2030, up from 2022’s $6 trillion.

This is one element that has encouraged private markets’ recent bullishness on the sector. Additionally, the disruptive impacts of technology, as well as the highly fragmented nature of the industry. Investors are also attracted to the countercyclical nature of education assets, being able to perform during times of economic boom and bust. 

EQT will have to hope that this projected growth is strong enough to overcome the obstacles facing PE-backed education assets today. Declining birth rates have raised concerns over the long-term viability of education assets. Meanwhile, public scandals such as Antin Infrastructure Partners’ inattention to abuse at its Hesley schools – and eventual divestment from the asset – have placed new scrutiny on PE’s movements in school and education going forward. 

Neuberger Berman did not respond to request for comment, while EQT did not provide a timely response. CPP declined to comment.

Buyout News​​ 

What else is going on in the deal space?

For starters, Thoma Bravo has acquired Secureworks, Dell Technology’s cloud-focused cybersecurity program, via its portco Sophos, a cybersecurity firm, for $859 million in cash. Dell acquired Secureworks in 2011 and listed it on the Nasdaq in 2016. It has been trying to sell the asset since 2019. The transaction is expected to close in early 2025.

Additionally, Vinted, a Lithuanian digital marketplace for second-hand goods, has hit a $5.4 billion valuation after a $367 million funding round led by TPG. Other institutional investors include EQT, Insight Partners, and Lightspeed Venture Partners.