Permira Advisers LLP agreed to sell Renaissance Learning Inc. to Hellman & Friedman LLC for $1.1 billion, quadrupling its 2011 investment in the education- analytics company.
The deal, announced in a statement today from Renaissance, translates into estimated proceeds of about $600 million for Permira, which contributed about $197 million of equity in the 2011 buyout, according to a Moody’s Investors Service report at the time. The London-based firm and its clients also planned to extract approximately $234 million in dividends last year, according to the ratings company. (For more coverage on the education sector, see "With Dealmakers, School is Still in Session.")
The company has benefited from the common core state standards -- a set of math and English goals for students that’s been adopted by 45 U.S. states -- by supplying teachers and schools with Internet-based programs to measure students’ learning progress. Renaissance has expanded sales at a double- digit percentage pace since Permira took it private in 2011 for $455 million, Chief Executive Officer Jack Lynch said in a telephone interview.
“There’s a rapid adoption of mobile, social and cloud technologies in education, with teachers implementing more rigorous standards and schools purchasing iPads for the classroom,” Lynch said. “Identifying where a student is on the learning path is really the secret sauce of what we do.”
Nathaniel Garnick, a spokesman for Permira at Sard Verbinnen & Co., declined to comment on investment returns.
(In 2011, Plato Learning Inc. had failed to court Renaissance Learning with a $496 million bid. The company lost the auction for the school-software maker to European private equity firm Permira in late 2011.)
Renaissance’s minority shareholders include Google Inc.’s growth-equity fund Google Capital, which is expected to reinvest in the company, Lynch said. Google’s fund invested $40 million in Renaissance last month, valuing the company at $1 billion.
Permira -- founded in 1985, the same year as Blackstone Group LP -- has investments in Hugo Boss AG, Ancestry.com Inc. and Legalzoom.com Inc., according to its website. Led by a partnership of more than 25 executives, the firm opened its first North American office in New York in 2002 and today manages funds with $30 billion in capital.
Permira is raising its fifth buyout fund and may exceed its target of 5 billion euros ($7 billion) by next month, according to people familiar with its plans. The group initially struggled to find backers, taking 18 months to hold an initial close, before surging stock markets around the globe boosted the value of fund holdings and lifted returns.
Hellman & Friedman, based in San Francisco, was started in 1984 and is led by Philip Hammarskjold. The firm was founded by Warren Hellman, who died in 2011, and Tully Friedman, who runs Friedman Fleischer & Lowe LLC, a San Francisco-based group that invests $50 million to $200 million in companies.