Good morning to everybody. Very happy to, to be with you on this Monday morning to announce, the investment that Wendel is going to make alongside Providence on a co-controlling stake of 50% in Globeducate. I'm here with David Darmon, who you know. David will go through more into the presentation after I make a quick introduction. And Xavier Lemonnier is here in order to answer any detailed question you may have on this subject. So, we're going to invest in Globeducate. Globeducate is a K–12 education leader in Europe. It has been founded in 1972 in Spain, but it provide education through a network of 65 premium bilingual and international schools together with online program across 11 countries, mostly in Europe.
The group today employs 6,000 people, including 4,000 highly qualified teachers. Globeducate is positioned in the very attractive K–12 market. K–12 means everything which is from primary to secondary school. It has 40,000 students with a world-class education, taught predominantly in English and adhering to high academic standards. The group caters mostly to local students, providing a stable and predictable revenue base. Very importantly, Globeducate has experienced a strong double digit in the past 7 years, both by the way, double digit for internal growth and through M&A in addition to that. And we, we, in the 7 years were under the ownership of Providence. We will be, I think, an active partner for Globeducate. As you know, education is a sector that has been looking into for many years.
We know the sector very well, and we already are active in two similar activities, not K–12, obviously, but CPI and ACAMS in the U.S., which are typically the same type of thing. We like, by the way, this asset also, because it's a sector which is answering very important needs of parents and parents, let's say. And the fact that this sector is not sensitive to the economic cycle. It is a long-term trend, long-term growth, and we think that will be exactly fitting with the DNA of Wendel. Long-term view in a sector that bring value to the global community and create potentially strong growth. We're here to stay for long.
Key figures is EUR 440 million of sales in 2025, EUR 120 million of EBITDA. As I've said, Globeducate is active in 11 countries, mostly in Europe, but not only. We'll come back to that. Growth have been double-digit, both, again, organic double-digit growth and through additional M&A that have been done during the last 7 years with 21 acquisition that been realized during this period. Students stay long, 8.2 years average student tenure. There is 44,000, sorry, students all over the different countries, and as I mentioned, 4,000 teachers are taking care of them out of the 6,000 employees of Globeducate.
We have, within Globeducate, high-quality infrastructure, and 35% of the schools real estate is owned by Globeducate and has long-term lease also. The key terms of our investment, we have just entered in an agreement with Providence to acquire a co-controlling stakes, which means that we will be both in control of this company, which is very important. As you know, we want to have investment in non-listed assets where we have controlling position. It's exactly in line with what we said. The closing is expected in the second half of this year. The enterprise value is close to EUR 2 billion. The investment in equity for Wendel will be EUR 625 million, alongside the management and the existing shareholder, Providence.
We will then have a 50% stake alongside Providence. Providence has been shareholder of Globeducate for 7 years, and he is a real experienced investor in the education sector, and we think that both them and us will bring significant value to help Globeducate continue growing in the years to come. So we're very happy from that. I will hand over to David, but we think this is really in line with the strategy that we announced 18 months ago in the investment in principle.
Again, this is an important step for us, and, by the way, since the last 18 months, we've made roughly EUR 2 billion investment that we've announced at that time, not only on private investment, also in the third-party asset management business, but I will come back to that on my conclusion. David?
... Thank you, Laurent. Good morning, everyone, David Darmon speaking. I'm turning on page four, on the main reasons why we did invest in Globeducate. We believe this investment is a great fit with our group and our investment strategy. First, because Globeducate has, as a priority, the personal development and safety of over 40,000 children, which fits very well with our core values. Second, the K–12 industry, as Laurent mentioned, is a very resilient and predictable industry. It's largely immune from macro uncertainties due to its non-discretionary nature. Globeducate in itself is a very unique company in that space. It focuses on bilingual students, so mostly local students. It has a very strong diversification in terms of curriculum.
You will see later that you can learn the local curriculum in Globeducate schools, but also the IB curriculum, the British curriculum, the French one, the Canadian one, so pretty diversified curricula. It's also quite diversified in terms of countries. Laurent mentioned a focus on Europe, but you will see later that the company is present in close to 11 countries. So large presence in Europe, but very diversified. So a very unique opportunity in that very attractive space. In terms of value creation, we really like the fact that the growth is a balanced growth with a good mix of enrollment growth, facility expansion, and a very strong M&A potential that I will describe later on. In terms of financial profile, it's a very well-invested group which has reached a significant scale.
It is driving savings in terms of operating costs, and you will see that it's, it has a very, strong financial and cash flow profile as well. It is a partnership with a successful investor, Providence, which has a very long track record in education. They had successful investment in Galileo and TES, obviously in Globeducate as well, and in the Study Group, for instance. So we are very pleased to partner with this firm. It's also a partnership with a very strong management team under the leadership of Luca Uva. We met, a lot of, ex-executive committee members, during our due diligence, and we were deeply impressed with the quality and the depth of the bench of this team. Turning to page five, that this is a snapshot of the industry and, and the group.
On the market, it's a very large, very global, and very fragmented market, which makes it quite attractive in terms of investment. It's a EUR 10 billion+ market, and the large players account for roughly 15% or 20% only. So there is still a very large and significant amount of single assets, and small schools to be acquired in consolidation. In terms of growth, I mentioned earlier that it's a predictable growth, as enrollments are made mainly ahead of the school start. So you have a good visibility of the 12 months forward. There is a very low churn, in both terms of students and teachers. And the CapEx for the immediate and short-term growth has been made by Providence and the team. So it's a very very solid and well-invested platform.
In terms of operational leverage, the group enjoys some scale benefits in purchasing, in recruitment, in operating leverage. In terms of cash flow, it has low maintenance CapEx. You can see here 2% of revenues as maintenance CapEx, on average. It does enjoy negative working capital, which makes it attractive in terms of financial profile. Regarding M&A, the team is pretty experienced. It has secured over 21 investment over the last seven years, in different countries. The group has 3 companies under exclusivity as well, for roughly EUR 9 million of EBITDA, that we believe are going to be closed by year-end. I'm turning on page 6. On page 6, you can see an overview of the different schools.
First, you can see it's very diversified, both in terms of countries, curriculum, and brands. It is mainly focused in Europe, with 80% of revenues being there, Spain and France being the largest two countries. Turning to page 7, the financial profile, you can see that the growth has been strong. Laurent mentioned a double-digit growth. It's thirteen percent per annum since 2021. We did put here on this slide 7 the performance through COVID. You can see that it was a very stable performance, flat despite the very harsh environment, because the... As I mentioned, it's a non-discretionary expense, and even in this time, the company is performing well.
You can also see here the performance in terms of M&A, that the company almost like everywhere has been able to add new schools to the group, generating a very strong growth over the last few years. Moving to page eight, and valuation, we are giving you here a snapshot of a sample of multiple space in this industry over the last 5 years. Those are forward EBITDA multiple pre-IFRS. You can see that they are roughly around 19x, sometimes more for global platforms, so platforms which are not local, sometime less for schools which are very small, very local in emerging market with some risk.
But for global platforms of the size and quality of Globeducate, a 19.4x forward is really in the norm of this industry, which is highly valued by the private equity industry for all the attractive features I'd mentioned. It's predictive, it's growing, and it's profitable. Moving to page nine, Laurent, for a conclusion and the key takeaways of this investment.
Thank you. Really, I think, as has been mentioned, this is typically the type of investment that we want to have in our portfolio, of the long-term asset that we own on the balance sheet. It's a world-class education group, with high, very high academic standard and very strong management team, as David has mentioned. It's a pretty unique global leading player, it's a rare asset and that has long-established relationship in a market that quickly developed, so we think it's a great and very attractive one.
The business where it is predictable, we know exactly what will happen next year, and we have high predictability on the years to come, and it's largely protected from macroeconomic risk, which we think is a key attractive of this investment. The company has a very strong track record, both in organic and external growth. Organic through, you know, increasing the size of its schools, but also by M&A, as mentioned by David earlier. And this M&A has been very successful by having a very good integration of the different acquisitions that have been made over the past. Again, the strategy of the development of this asset and the value creation we can make with it is really based on multiple growth initiatives, including geographic expansion, as also we've mentioned.
We really think there is a strong fit with Wendel track record in education. It is, as I mentioned, fully in line with our strategic roadmap. We've announced 18 years ago, EUR 2 billion of investment. If you include what have been done in Scalian, in IK, and the different investment in, in sponsor money, in IK and so on, we are, we have done the, EUR 2 billion. However, even if we've done that EUR 2 billion, I must say that Wendel loan-to-value after that acquisition, pro forma, this transaction would be approximately 5.6%, leaving ample room for Wendel to continue investing, specifically in building the third-party asset management platform, which started with the acquisition of IK Partners. So we are really going our route. We're really delivering what we've said, and we will continue.
I think there's more to come. Thank you very much, and we're happy to answer your questions.
Thank you, sir. To ask a question, you need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. If you wish to ask a question via the webcast, please type it into the box and click Submit. We will now go to our first phone question. One moment, please. And your first question comes from the line of Joren Van Aken from Degroof Petercam. Please go ahead.
Yes, good morning, everyone, and congrats on the transaction. Just a bit of a question on the structure of this transaction. So the EUR 625 million, is that then going to Providence? Are they, like, the selling shareholder in this, or is this money going to Globeducate? And if so, what is the money going to be used for?
Well, you basically, the primary or secondary. The money goes to... It's not primary, it's secondary, so the money goes to Global, to Providence.
Okay, that's very clear. Thank you.
Thank you. We will now take our next question. Your next question comes from the line of Grégoire Hermann from Berenberg. Please go ahead.
Hello, good morning, everyone. Thanks for taking the questions, and congrats again for the acquisition. Just a few questions on the assets. I think you've shown on one of the slides that you've delivered 13% growth over the past years on a CAGR basis, both including M&A and organic growth. Could you tell us what is the figure of the growth, just on an organic basis? And then on the margin improvements that you intend to make, the operating leverage that you mentioned, where do you expect to have this margin improvement? Is it by increasing the number of students per teacher, for example? Or can you be a bit more specific there?
Maybe just finally, could you give us the net debt figure of the whole company, please? Thank you very much.
Yeah, I will, I will. Xavier Lemonnier, who's Managing Director in the investment team of Wendel, will and has lead the transaction, will answer to you on those questions. Xavier, please.
Good morning, everybody. So on your first question about organic growth, this is a business growing at high single digit to low double digit organically. What you see on page 7 for the period 2021 to 2024 is on a pro forma basis for acquisitions. In 2025, you have a little bump driven by the ongoing M&A that have been secured.
... To your second point about margin improvement, it comes mainly from the ramp up of expansion. So this is a business which is growing its capacity and investing a lot in new facilities. And as those facilities are taking more and more students, there's a positive scale effect, and it leads to margin improvement. And to your third question about the net debt, this is a business which will be funded with an investment which will be funded with roughly 6.5x leverage on an LTM basis.
Thank you.
Thank you. Your next question comes from the line of Alexandre Gérard from CIC. Please go ahead.
Yes, good morning, and, congratulations for that transaction. Three questions on my side. First question is, regarding the strategy of the company going forward for the next five years. What are the main pillars? Do you intend to enter new geographies to launch new products? Second question, is the company facing particular challenges? And third question, are there any put call agreements between you and Providence to increase your stake in the company in the coming years? Thank you.
David, do you want... Or Xavier, do you want to take that.
Yeah.
Okay, you take that.
In terms of new geographies and new products, so the company is growing, as you understood, through M&A in part, and they are contemplating making acquisitions in new countries. So, they are looking at various opportunities, notably in Europe. In terms of new products, I mean, this is a one product company. They're offering K-12 education, and instead that each school has its own specificities. But overall, the intention is to continue operating in the K-12 market, so primary and secondary education. To your second question on the challenges, this is an education business. I think there are not so many challenges.
I think there's an utmost priority being given to, you know, academic quality. Part of it is recruiting the best teachers. We think this company has the scale and is attractive for teachers. They have one of the lowest churn in terms of teachers in the industry, which makes it very, very attractive.
The third point about puts and calls with Providence, we'll not disclose the terms of the governance.
Okay, thank you.
Yeah, just to clarify two things. First of all, one word on leverage. Leverage is going to be slightly below 6. We're talking about more 5.5 times leverage rather than 6.5, just to come back to this. And we don't disclose the relationship and the agreement with Providence by definition, but there's no puts and calls.
Thank you. Once again, if you would like to ask a question on the telephone, please press star one one. We will now go to your next question. Your next question comes from the line of Arnaud Palliez from CIC Market Solutions. Please go ahead.
Yeah, good morning, and congratulations for this very interesting acquisition. I have two questions, please. The first one is regarding the deal itself. I just would like to know how it was organized. Was it a tender made by Providence? And so can we have a bit more information about the disposal process? And my second question is about the real estate policy. If I'm right, you mentioned that 35% of the real estate is owned by Globeducate. So, can you give us some more details about what is the real estate policy of the company?
If this real estate development is included in their own CapEx? Or how does it work exactly? Thank you.
Okay, for the process itself, Globeducate is an asset that the team has been looking after for last three years, so we know the assets very well. We've been discussing with Providence for years, so we know very well this asset. In this situation, Providence has discussed with a few parties, but they were looking for somebody that want to invest alongside them, so it's a very different situation than a pure auction, where you want to sell 100% of the company. Here, it was really to create a partnership with somebody, and somebody that also has the ability to well get together with the management. So these three parties organization make it a specific discussion.
Doesn't mean that Providence didn't have discussion with others, but it's not a typical auction like you may think of. I will leave Xavier to answer the question on the real estate.
For the real estate, when the company has, as mentioned, has a mix of owned and leased real estate in its portfolio, there, there's no specific policy there. There's a preference for leased sites, but the company can also, for some M&A, for example, they can also acquire the real estate and also consider from time to time, you know, selling it back when it's feasible. So, yeah.
Okay, thank you.
Thank you. There are currently no further phone questions. I will hand over to Olivier for web questions.
Thank you. So we have a question from Geoffroy Michalet, ODDO. It's not common for Wendel to co-invest at parity with another investor. What was the rationale? Is there a possibility that you could buy the remaining 50% of Providence?
So actually, we have a long history of partnership, both with strategic investors and with financial investors, who, as you remember, we were 50/50 partners with Schneider and Legrand. We were 50/50 partners with Carlyle. On Stahl, and we were 40/40 partner with Warburg on Allied Universal as well. And currently in the portfolio, we are partnered with Clariant and BASF in Stahl. So we actually have quite a long history of partnership. And so we know that it's a governance that requires more attention and more trust. And so we are very at ease with this type of setup.
Thank you.
Sorry, there was a question whether we can buy or not Providence. I think it's, as I say, there's no puts and calls, but Providence is here to stay for the next five to seven years. However, at some stage, it is a possibility. It's, there's no obligation, but it is a possibility, but amongst others.
Thank you. Still from Geoffroy. Given the very high valuation multiples, can you provide us with some color on the cash conversion of the company and the sector?
So on the cash conversion of the company, I mean, this is a business which is, as David mentioned, which enjoys low maintenance CapEx and negative working capital. So it makes it a cash-generative business. Having said that, it is a business, and that's also why one of the reasons why we were attracted to it, that has invested significantly growth CapEx to expand its current footprint, to refurbish its facilities, to innovate in, you know, the academic processes and methodology. Think about digital tools, for example.
A significant part of the money has been reinvested, and we will continue to support that in order to make this business even more attractive and continue to generate sustained growth.
Yeah, in a nutshell, it generates significant cash, but we think the best way to use this cash is to reinvest it in growth. And that growth may be internal growth by expanding capacities or external growth through M&A. But
Thank you. From Geoffroy again. What is the value of the real estate portfolio, and is there a willingness to further expand this portfolio?
Not being too specific here, it's several hundred million EUR worth. I mean, as I mentioned, there's no specific policy with regards to real estate. There's agility from the company in its external growth towards, you know, opportunities that own their real estate or opportunities that lease their real estate. Both are being contemplated, but there's no specific priority being given to one or the other.
I think it's a very pragmatic approach and depending on the local situation.
Thank you. Question from Samarth Agrawal . Thanks for the presentation. Could you break down sales growth and EBITDA margins within Europe and ex-Europe?
No, we're not going to split the growth and profitability by regions.
Thank you. Globeducate has grown top line at double-digit rates since 2017. What would be the split between organic and inorganic?
As I said, we're not gonna get the difference, but the organic growth was, as mentioned by Xavier, high single-digit to low double-digit growth during the period. To that was add some M&A. But the organic was, again, depending on the years, but high single-digit to mid- to low double-digit growth, organic growth.
Thank you. Question from Samarth Agrawal again. How much of organic growth is driven by increase in, A, number of students versus, B, fees?
Majority of the growth is driven by enrollments growth.
Thank you. While this is a fragmented market, what is the criteria for M&A in terms of revenue threshold and focus cities, submarkets?
So it's about the ideal targets for M&A?
Yeah.
First, it's about bilingual schools. I think this is a group which caters a lot to the desire from students' parents to offer a multilingual, bilingual curriculum in English or in French, or yeah, that's the main priority. So in terms of size, in terms of countries, in terms of cities, the group is relatively pragmatic. And they will conduct a very careful due diligence in their M&A to ensure that the schools that they contemplate acquiring also offer the highest academic standards in line with the rest of the group.
Thank you. Last question from Samarth Agrawal . What would be the terms of any partners divesting from its stake to a third party, especially as Providence being a key player that may have short holding period versus Wendel?
As I mentioned, the Providence has it has a 5-7 years horizon of that investment. We have no specific horizon on our part. We don't go into the detail of the relationship between Providence and us, but we have ensured a full alignment of interest between the parties.
Thank you. No more questions from the web. I think we have an additional question by phone. Operator?
Thank you. We will now take the next phone question, and the question is a follow-up from Grégoire Hermann from Berenberg. Please go ahead.
Yes, hello again, everyone. Sorry for that. Just two additional questions on the asset itself, please. Can you tell us how much does it cost, basically, for a student per year to be scholarized in this school? If possible, or if there is, like, an average. And, can you confirm that, in most cases, the parents of the students are expatriates? Thank you.
So to the second question, I'm not confirming, I'm informing. It's mostly local student, not expatriate. That's what make the this case a very interesting one. I think. It address local market to families that want to have a bilingual education for their children. It's not a— There is a few expats in some of them, but most of the market here, we're talking about, student that are local students and that receive that kind of high education that the parents are willing to have for them, students. By the way, it is bilingual.
Much of the time it's English, but not only, sometimes it's giving French education, and sometimes it's giving Spanish also. So it's, it's a little bit more, but it's bilingual. That's, that's the number one element, mostly local, a few expat, but mostly local.
Regarding the tuition fees, it's hard to give you an answer because situations is obviously very different between India and, and Canada or U.K., for instance. So an average is not, is not very meaningful. Let's say it's, it's a few thousand euros. It really depends if, if you add on top of that some extracurricular activities. You have some schools where you can have, three or four hours of additional like music classes or horse riding classes, which will, which will increase the, the fee payments. But, it's, let's say it's a few thousand euros per student.
Okay. Thank you.
Thank you. There are no further questions. I will hand the call back for closing remarks.
Okay. Thank you very much for all of you being there on this morning, morning. We think it's a great asset and a great addition to Wendel portfolio. We're very happy to have Providence as a partner with us in this great investment. I think we will all meet again at the beginning of August. Is it August 1st or 2nd? Yeah, August 1st for the half-year earnings of Wendel. Thank you very much for all having been here, and talk to you soon. Thank you. Bye-bye.
Thank you.