4 May 2018
EIS-backed turnaround delivers 75x investment return in five years
• Investment firm transforms distance learning firm into market leader in online education
• Transformation includes world-first innovation in online education
An Enterprise Investment Scheme that led to a world-first innovation in online learning has given investors a 75x return on their money in a little over five years.
The Par Syndicate, a business angel network established by Edinburgh-based venture capital firm Par Equity, acquired International Correspondence Schools in late 2012. At the time, despite being a long-established “distance learning” specialist, ICS Learn had an uncertain future. Now, after half a decade of refocusing and growth, it has been transformed into a fully fledged online education provider and a trailblazer in virtual learning environments. One of its courses, centered on personal fitness, was the first in the world to allow students to complete their qualification exclusively through video submissions of their work.
Now known as ICS Learn and catering for more than 15,000 online students around the globe, the Glasgow-based company has been sold to a private equity backed MBO. It had already paid a dividend in 2017, delivering a pre-tax return of more than 140%, before Par Equity prepared for an exit that would ultimately prove successful.
Par Equity Managing Partner, Paul Munn, said: “The total return for an initial £1,000 investment is over 75x on a pre-tax basis and over 100x if you take EIS reliefs into account. “So, this is a huge success story for all concerned – for the investors, for the company and its employees and for the thousands of students who use ICS Learn to build their skills. “It demonstrates the power of EIS and the importance of releasing capital to finance and develop promising UK businesses, particularly those in knowledge-intensive sectors.”
Par Equity raised investment to acquire the business and funds were channelled into technology, course content, staffing – including around 20 new employees – and tools/support, most notably virtual learning environments. Munn said: “Having achieved a significant transformation of the business, we saw there was a clear opportunity for a strong exit. “On balance, although the board did weigh the potential to continue to operate and grow the business, it was felt that new owners would better support further expansion. “We exited in the knowledge that ICS Learn is now a leading provider in every sector that it focuses on and the fastest-growing online education business in the country. “Par Equity has now investedover £50 million in 45 companies, the sale of ICS Learn brings the number of exits for Par Equity investors to 12 (both positive and negative). These twelve exits have generated aggregate proceeds of £38.0 million on investment of £7.8 million, representing a cash-on-cash multiple of 4.9x and a realised IRR of 41%.”
Notes: Par Equity is a venture capital firm with a hands-on, high impact investment style. It seeks out opportunities to invest in innovative young companies with strong growth potential and works closely with them to help them succeed. Its primary interest is in companies that are innovative and which gain competitive advantage by doing things in new and better ways. Where possible, Par Equity uses government-approved tax wrappers such as EIS to maximise returns to investors and mitigate the risks of early stage investment. The company has been built by investors, for investors.
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