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Palamon Capital Partners sells CEG to Bridgepoint for 14.6x investment return

Mid-market European private equity firm Palamon Capital Partners has agreed the sale of its majority stake in Cambridge Education Group (CEG) to Bridgepoint. 

The sale will generate a return on investment for Palamon of 14.6 times, with a capital gain of GBP141m and an IRR of 58 per cent.
Cambridge Education Group provides pre-university education to students from over 95 countries via its global recruiting network.  It forms part of the rapidly growing UK education export industry, which is estimated to be worth GBP17.5bn p.a. and one of the ten largest export segments in the country.
Palamon originally sourced its investment in CEG directly from the founding team of Nick Golding and Elizabeth and Ann Armstrong in 2007. At that time CEG taught 460 academic students per year across two campuses in Cambridge and Canterbury.  Today, CEG teaches over 3,000 academic students and thousands of short-term English language students each year across its four divisions in three countries.  In excess of 75 per cent of CATS students gain entry into top ranked universities each year.
During Palamon’s ownership, CEG has grown revenues five-fold to an estimated GBP90m for the academic year 2013-14.
Louis Elson, managing partner at Palamon, says: “We are very proud of having played an important part in building CEG into a leading brand with a dominant position in the education sector. This is a classic ‘breakaway’ Palamon investment. We identified an unusual opportunity in a small business context with strong potential and combined it with exceptional management talent to deliver explosive long-term growth.  I speak for the various Palamon team members who conceived and transacted on the CEG investment, including Dan Mytnik who gave invaluable guidance to the company throughout its development, in recognising the great achievement of CEO Fergus Brownlee and his chairman Stephen Warshaw.  We wish Fergus and his team continued success with their new partners.” 
Fergus Brownlee, chief executive of CEG, says: “We are delighted with what we have been able to achieve during the past seven years with the close and supportive collaboration of our partner, Palamon.  We have taken CEG from being a small UK platform to a market leading brand with an international presence and are now looking forward to working with Bridgepoint to capture the next stage of growth.”
This is Palamon’s sixth exit from its EUR670m 2006 fund, Palamon European Equity II, which to date has generated cash proceeds of EUR660m and a 3.6x return and 28 per cent IRR on fully realised investments.  Palamon II still has 11 high growth companies remaining in its portfolio, including Retail Decisions, a global fraud prevention provider for card-based and online transactions; IDH, the largest NHS dental practice group in the UK; and OberScharrer Group, an ophthalmic healthcare business in Germany. 

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