Return on investment
- Proceeds received on sale: £19m
- Uplift to carrying value: 113%
- Underlying manager: ICG
- Date realised: December 2018
Cambium provides educational software for primary schools in the United States. It was acquired in 2016 as part of a restructuring transaction originated by the ICG Strategic Equity’s team. The team agreed to acquire interests in US based mid-market manager, Veronis Suhler Stevenson’s (“VSS”) 2005 vintage fund. VSS believed that the remaining portfolio needed additional time to optimise returns but much of the investor base wanted to realise their interests in the fund, which was in its 11th year.
The restructuring of the fund resulted in ICG Strategic Equity providing additional capital to invest in the underlying companies, extending the fund’s life and providing existing investors with an option to exit. As a result, the ICG Strategic Equity team acquired Cambium at a highly attractive entry multiple. ICG Enterprise Trust participated in the transaction through its commitment to ICG Strategic Secondaries II and directly.
The ICG Strategic Equity team played an active role in the management of the Cambium, helping to drive strategic change and to make key changes to Cambium’s senior management team. The team also helped to accelerate the digitisation of the business and its conversion to a subscription based model as well as working with VSS to formulate an exit strategy.
Between 2016 and 2018, EBITDA grew by 10% p.a. and free cash flow was used to completely deleverage the business. In December 2018, Cambium was sold for $685m, a 113% uplift to the January 2018 valuation and a gross IRR on the investment of 82%. The transaction demonstrated the ability of the Strategic Equity team to acquire companies at attractive valuations and the value of its active operational involvement to generate strong returns.