Wellspring Cashes in on Education Sale.(News) - Mergers & Acquisitions Report

Byline: Ken MacFadyen

Wellspring Capital Management exited its investment in Vatterott Educational Centers after a six-plus year holding period. TA Associates, which closed a $4 billion fund last month, is the buyer, paying an undisclosed amount for the St. Louis-based post-secondary education provider.

Vatterott operates 22 campuses across nine Midwestern states, offering a range of programs, including both associate and bachelor degrees in advanced trades, allied health, culinary arts and computer technology. Wellspring acquired the company in 2003 for a reported $105 million.

A Wellspring representative would not comment on returns, although outwardly the deal appears to be a solid homerun for the firm. Earlier this year, sister publication Investment Dealers' Digest reported that Wellspring was able to line up $90 million of senior financing for Vatterott in a dividend recapitalization that allowed the firm to recoup more than $40 million in proceeds.

For TA Associates, the investment marks a return into the education space, a sector that has served as one of the few bright spots for PE investors. Warburg Pincus, for instance, scored a partial exit of its investment in Bridgepoint Education, floating the company earlier this year, while Chicago Growth Partners and ClearLight Partners sold US Education Corp. last year in a strategic deal that reportedly more than tripled the firms' investment.

Meanwhile, on the acquisition front, Sterling Partners took a control stake in the Paul Green School of Rock Music in July, while Veronis Suhler Stevenson, the same month, agreed to merge its Cambium Learning platform with Voyager Learning in a deal that allows VSS to maintain a control stake in the combined company.

BMO Capital Markets advised Vatterott on the sale, while Dow Lohnes and Paul, Weiss Rifkind, Wharton & Garrison each provided legal advice to the sellers. TA tapped Goodwin Procter LLP and Powers Pyles Sutter & Verville PC as legal and regulatory counsel, respectively.