Baring made the successful bid for Nord Anglia via its wholly owned acquisition vehicle Premier BidCo on July 7, which was recommended by the board of Nord Anglia. Baring offered ú4.60 per share, representing a total equity value of ú190 million. The price was a 70.4% premium to the average closing price of Nord Anglia for the six months up to June 6, the day before Nord Anglia confirmed it had received an initial takeover proposal for the company, and a 48.8% premium to the closing price on June 6.
The offer turned unconditional on August 18 when Premier BidCo cornered 91% of the shares of Nord Anglia, enabling Premier BidCo to proceed with a minority squeeze-out. Before the offer was launched, the directors of Nord Anglia had agreed to tender their 0.1% shareholding in the London Stock Exchange-listed company.
Nord Anglia has two divisions: international schools and learning services. The former operates nine international schools under the ôBritish International Schoolö brand in China (four schools), Korea (one school) and Eastern Europe (four schools). The company currently has over 4,500 enrolled students. It has a total capacity of 7,300 students, 5,000 of which are in Asia and the rest in Eastern Europe. The learning services division provides contractual education services (outsourced management of schools and quality audits) to the public education sector in the UK and the Middle East.
Baring made an initial takeover offer of ú180 million, or ú4.50 per share, for Nord Anglia in June, which the company rejected on the basis that it did not reflect the growth prospects of the firm. But the July offer, improved by 5.5%, coupled with the fact that market sentiment was not improving was sufficient for Nord AngliaÆs board to change its mind, say specialists.
BaringÆs growth plan for Nord Anglia is to roll-out further school campuses across existing and new markets in Asia and expand the learning services footprint in new markets, particularly in the Middle East.
Nord Anglia's management will continue to be involved in the firmÆs future and will also own some equity in Premier BidCo though details were not disclosed. Sources close to the deal said only that it was a ôstandard management packageö and did not disclose whether management had agreed a non-compete.
UBS was lead financial advisor to Baring Asia and Credit Suisse provided additional financial advice. Nord Anglia was advised by Hawkpoint.
Baring raised debt in Premier BidCo to part finance the deal. The financial sponsor raised $230 million of debt and to date has drawn down $180 million, equal to the equity, say sources. The mandated lead arrangers supporting the deal include JapanÆs Mizuho Bank and SingaporeÆs United Overseas Bank. The deal was done at 4.7 times Ebitda, which specialists term reasonable.
"We were successful in pre-placing all the mezzanine and a large portion of the senior secured facilities with mainly Asia-Pacific institutions, which is testimony to the great brand and strong fundamentals underpinning the business," says Ronan Agnew, head of financial sponsors, Asia-Pacific at Credit Suisse.
The Asia-centric business of Nord Anglia and the growth prospects in the region was a driver of the deal for Baring, say sources. The dealÆs ability to raise financing in Asia, on the back of strong existing cash flows from the region, would have helped the deal get done. These factors confirm once again that leverage for smaller private equity deals, done at sensible multiples, continues to be available in Asia.
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