The owners of Corndel, a fast-growing apprenticeship provider that serves some of the UK’s largest companies, have drafted in advisors from Lincoln International to explore options around a sale, EducationInvestor Global can exclusively reveal.
This publication has learnt that the directors of Corndel, which since inception in 2016 has won contracts from blue chip organisations including BP, Legal & General and UBS, have instructed corporate financiers from the investment bank to launch an auction in the fourth quarter of this year.
In the meantime, Corndel will look to boost profitability by up to 40%, one source said, while Lincoln International will prepare the business for sale and meet with prospective buyers to warm up investors’ appetites.
According to corporate filings, during the six months ending 30 June, 2019, Corndel recorded pre-tax profits of £259,000.
However, Corndel’s annual revenues are expected to total £24 million this year, and its profit margin is expected to widen as it transitions from a start-up enterprise to a business that caters to more than 3,500 learners a year.
Corndel was launched in response to the introduction of the UK apprenticeship levy, which since 2017 has forced large organisations to set aside a percentage of their payroll value to fund workplace training through apprenticeship schemes.
Corndel primarily offers high-level apprenticeships and diplomas that are typically utilised by large organisations to upskill members of their management teams.
It counts several FTSE 100 organisations among its key clients.
This publication understands that Corndel’s management team, which is led by chief executive Sean Williams, is seeking a funder that can help the business reach £100 million in revenues over the next four years by bolstering its apprenticeships, commercial training and executive coaching offerings in the UK and internationally.
The first phase of Corndel’s growth, between 2016 and now, has been funded by around 35 individual investors who provided the firm with capital through the UK’s enterprise investment scheme, a tax-efficient investment initiative that channels funds from private investors into fledgling firms.
Corndel is likely to draw interest from mid-market private equity houses, which are attracted to the UK apprenticeship market because of the relatively high levels of fragmentation it showcases and the role its participants play in improving productivity levels – an initiative that has strong cross-party support in Whitehall.
A number of recently closed and ongoing transactions evidence the close attention that private equity is paying to the sector.
Last week, apprenticeship provider Learning Curve was acquired by London-headquartered buyout group Agilitas Private Equity, as reported exclusively by this publication.
The same week, a chorus of private equity groups including KKR, Equistone Partners and CapVest tabled preliminary bids for Lifetime Training, a UK-based apprenticeship provider owned by Silverfleet Capital, another mid-market private equity fund.
Corndel could also catch the eyes of corporate buyers, one source said.
One such suitor could be US-based publisher Wiley, which stepped into the UK training market in January with its $129 million purchase of technology training provider mthree from ECI Partners.
One source, however, questioned Corndel’s “exposure” to potential further changes to the apprenticeship levy – specifically around the ways in which levy funds can be deployed – because of its acute focus on providing management training, as opposed to low-level apprenticeships for school leavers.
Lobbying efforts to prevent levy funds being used to fund so-called MBA-style apprenticeships have gathered momentum, with think tanks such as the Resolution Foundation calling on government to curb spending on pricey training schemes, which, it argues, are draining the national apprenticeship budget while “crowding out” young learners.
If such warnings are acted on and rules are revised, there is a risk that Corndel’s revenues could take a hit as levy-paying companies could be forced to reallocate funds to lower-level training initiatives, the source said.
A spokesperson for Corndel said: "We are seeking a funding partner that shares Corndel's vision and values so that we can deliver yet more transformative professional learning to more learners and more businesses.
“We have appointed Lincoln to help us in that search."
A spokesperson for Lincoln International confirmed its mandate, but declined to comment further.