Palatine sells Estio to PE-backed BPP

The sale generated returns of 51% IRR for Palatine.

The deal is the first exit from Palatine's debut Impact Investing Fund, which held a final close in September 2017 on GBP 100m. Partner Beth Houghton leads the firm's impact strategy, which focuses on delivering positive social impact. The fund generally invests equity tickets of less than GBP 10m, focusing on themes including integrated health, ethical consumerism, lifestyle and wellbeing, and the circular economy.

Palatine partner Gary Tipper told Unquote in June 2021 that the GP was planning to raise its second Impact Investing Fund. At the time, the Impact Fund was around 70% deployed across eight companies. The fund made its first investment in November 2017, acquiring HR absence management software E-Days.

The GP acquired Estio in September 2018. Palatine said in a statement that it invested in the company's digital infrastructure during the three-year investment period. The company has tripled its revenues and increased the number of apprentices in training by 40%, according to the same statement.

The company's ESG achievements include a reduction of the company's carbon footprint by more than 90%, Palatine said in the same statement. In addition, the number of female apprenticeship candidates increased by 33% and the proportion of candidates residing in areas of deprivation increased to 35%.

TDR Capital acquired BPP in March 2021 from Vanta Education, which is backed by investors including Apollo Global Management and US-based Vistria Group. The GP said in a statement issued at the time that it intends to support BPP in the development of its digital capabilities, as well as its education and training offering.

The deal continues what has been a busy year for the education sector. As of October, the sector had seen 17 deals totalling more than EUR 2bn in 2021, according to Unquote Data. Other recent deals in the sector include Synova's acquisition of National Education Group, a provider of online continuing professional development (CPD) training for schools and education organisations.

Click here to read a GP profile of Palatine Private Equity on Unquote.com

Company
Founded in 2013 and headquartered in Leeds, Estio provides training for NVQ level 3 and level 4 IT and digital apprenticeships. Candidates complete their apprenticeships online and can study areas including network and infrastructure, software development, DevOps, cybersecurity, data and business analysis, and digital marketing.

At the time of its acquisition by Palatine, Estio posted revenues of GBP 3m and EBITDA of around GBP 400,000, according to Unquote Data. The business is classed as a small company by Companies House, implying that it generates turnover of less than GBP 10.2m. In addition to its headquarters in Leeds, Estio has offices in Manchester, Birmingham and London.

People
Estio Training – Lee Meadows (co-founder, CEO).
Palatine Private Equity – James Gregson (senior investment director).

Advisers
Vendor – Clearwater International, Rob Burden, James Croxen, Christian Pollard, Chris Grayston (M&A); Addleshaw Goddard, Andrew Green, Samantha Wright (legal).

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