An Enterprise Investment Scheme that led to a world-first innovation in online learning has given investors a 75-times 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 was in danger of administration, with 50 jobs and the hopes of thousands of students at risk.
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, centred 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 per cent, before Par Equity prepared for an exit that would ultimately exceed all expectations.
Par Equity Managing Partner Paul Munn, says: “The total return for an initial GBP1,000 investment is over 75-time on a pre-tax basis and over 100-times 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 says: “Having achieved a significant turnaround, 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 invested over GBP50 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 12 exits have generated aggregate proceeds of GBP38 million on investment of GBP7.8 million, representing a cash-on-cash multiple of 4.9-time and a realised IRR of 41 per cent.”
