Business angel network The Par Syndicate, established by venture capital firm Par Equity, has delivered one of the strongest investor return in recent years following its sale to the International Correspondence School (ICS Learn).
After five years of refocusing and growing ICS Learn, the business syndicate has delivered a 75x return for investors after a sale to private equity-backed MBO.
Par Syndicate acquired distance learning specialist ICS Learn in late 2012, which was in danger of falling into administration and had 50 jobs at risk.
The 75x figure is based on a £1,000 investment on a pre-tax basis and is over 100x if you take EIS reliefs into account. EIS, launched in 1994 to help counter the risks of investing in companies not listed on a stock exchange, allows businesses to raise up to £5 million in investments with income and capital tax relief.
What is ICS Learn?
ICS Learn provide online accredited courses for people wishing to take a range of GCSE, A-level, management and sport courses. Its personal fitness course was the first in the world to let students to complete their qualification exclusively through video submissions of their work. The gym and sports market has been growing in popularity in the UK in recent years.
Par Equity raised investment to acquire the business, and funds were used to improve existing technology, course content and staffing. About 20 new employees were hired and new tools, support and virtual learning environments were acquired.
Par Equity managing partner Paul Munn said, ‘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.’
Munn said the Par Syndicate exited because it felt the MBO would better support further expansion.
He added, ‘Having achieved a significant turnaround, we saw there was a clear opportunity for a strong exit.’
Par Equity has now invested over £50 million in 45 companies and 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 £38 million on investment of £7.8 million, representing a cash-on-cash multiple of 4.9x and a realised IRR of 41 per cent.