Onex Corp. owns a number of companies – including Tes and Baltimore-based Fidelity Building Services Group – that use technology to improve performance in established sectors such as education, property management and health care.Nathan Denette/The Canadian Press
Onex Corp. has agreed to acquire London-based education technology company Tes Global, setting up the alternative asset manager for a new round of private equity fundraising early in the new year.
The 111-year-old British company serves more than 13 million teachers at 17,000 schools in 117 countries, and Toronto-based Onex announced on Tuesday it is buying Tes Global from Rhode Island private equity firm Providence Equity Partners LLC.
Tes was founded as a weekly newspaper section, known as the Times Educational Supplement, aimed at education professionals. Media giant News Corp. sold Tes in 2005 for £235-million ($393-million), and the company expanded over the past 16 years under four different private equity owners. Tes has 600 employees, and its executive team will invest in the company alongside Onex.
“Tes has a well-established brand and deep-rooted relationships with teachers,” said Nigel Wright, Onex’s London-based senior managing director. “We were attracted to its focus of helping both teachers and school administrators deliver better educational outcomes for students in the U.K. and around the world.”
Onex now owns a number of companies – including Tes and Baltimore-based Fidelity Building Services Group, acquired in early November – that use technology to improve performance in established sectors such as education, property management and health care. “Onex’s experience in both the business services industry and supporting companies in their acquisition plans makes us the ideal partner for Tes,” Mr. Wright said.
While Onex, Providence and Tes did not release financial details of the transaction, based on Onex’s recent financial disclosure, it committed approximately US$360-million of capital from its flagship Onex Partners V fund to the acquisition. The actual purchase price will likely be several times that amount, as Onex will borrow a significant amount to conclude the deal.
Onex said in a news release its US$7.2-billion Partners V fund is now 78 per cent committed, up from 73 per cent in early November, after the acquisition of Fidelity Building Services.
In mid-November, Onex president Bobby Le Blanc said in call with analysts that his company expects to begin raising its sixth flagship private equity fund in the first half of 2021.
Onex also expects to raise its fifth fund under its ONCAP brand, which targets small to medium-sized businesses that require capital commitments of US$20-million to US$200-million. In 2016, ONCAP raised US$1.1-billion for its fourth fund.
Onex’s financial adviser on the Tes acquisition was Rothschild & Co., and its legal counsel was Latham & Watkins LLP. Arma Partners and Morgan Stanley & Co. advised Tes, with Weil, Gotshal & Manges as legal counsel. The transaction is expected to close in the first quarter of 2022.
Prior to being purchased by Provident in 2018, three private equity funds owned Tes over a 13-year period: TPG Capital, Charterhouse Capital Partners and Exponent Private Equity.
Over the past decade, private equity funds have become dominant players in global capital markets, and transactions between fund managers are increasingly common. A recent study by data service Refinitiv showed the value of private equity deals more than doubled through the first nine months of the 2021 compared with the same period a year earlier, with a record US$839.6-billion committed to acquisitions.
Refinitiv’s research showed private equity buyers targeted sectors such as technology, health care and retail.
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Andrew Willis