Identify
The Apax Partners Tech & Telecom team had been
researching the education technology market for some time prior to
the investment in Promethean.
Across our sectors, Apax Funds are one of the world's largest
private investors in Education through companies such as Cengage
Learning, Emap and SMART Technologies. It is a sector that we are
interested in because it is relatively isolated from the economic
cycle by continued increases in Government and private spending in
education across the world.
Technology in education
We were also attracted by the global dynamics. Many education
systems are in a state of flux and this is not restricted to the
'developed world'; the market for talent is global and systems are
responding to this globalisation.
Education technology was seen as an especially exciting area for
us because in the UK it was reaching a critical mass where we
thought wider-scale adoption would become inevitable both in the
home market and abroad. Our thinking was in part driven by the huge
disparity we saw between the use of technology by children in the
home and at school.
Our focus on this growth sub-sector eventually led us to Tony
Cann, a British entrepreneur who founded Promethean in Blackburn, a
town in the North of the UK. His simple goal was to provide
teachers with the technological tools that would enhance the life
chances of their pupils. This was back in the Summer of 2004, Tony
was looking to release some of the equity that he had built up in
the business and Apax Funds entered into discussions with him about
a minority investment to help propel it on its next phase of
development.
So what does Promethean do?
Promethean is one of very few specialist players dedicated to
classroom technology solutions, making and supplying Interactive
Whiteboards along with in-class voting systems, remote tablets and
associated software and content. The technology allows for genuine
two-way communication between teachers and students via a variety
of different types of content including multimedia content,
pre-prepared class materials and the internet. This results in
improved teaching effectiveness and efficiency, and higher levels
of pupil attention.
And why were we attracted?
There were several key reasons for investing. Firstly, and most
importantly, we strongly believed in the Promethean product range
and in the huge potential of the marketplace, which had taken off
in the UK but was still in its infancy elsewhere. Secondly, the
management team had a proven track record of growth and thirdly
there were significant technological barriers to entry for other
people trying to replicate this success.
Support
One of the main opportunities we identified in
Promethean was to help management take a proven product in the UK
market to an international audience.
At the time of the initial investment, the UK was the most
advanced in education technology, but it still only had around 20%
penetration. Other developed countries lagged far behind so there
was clearly an opportunity to build an international success story
out of this UK-based technology company.
Experienced management
In order to realise this opportunity, the company needed a
management team that was experienced in building international
businesses. With this in mind, Graham Howe, former deputy CEO of
Orange was appointed Chairman and Jean-Yves Charlier, a former CEO
of Colt Telecom, was recruited to become Chief Executive. Since
then, Jean-Yves has made a number of key hires to build a team that
is truly capable of executing this global expansion.
Having a clear strategy based on international and product
expansion and a management team with the experience of realising
this strategy has borne fruit. The management team has delivered;
in the five years since Apax Funds invested, the Company has gone
from having 90% of its business based in the UK, to over 85%
outside the UK. In the same period, revenues have increased from
£60m to £200m.
Diversification opportunities
Another key success has been the diversification away from its
core interactive whiteboards space into other related products such
as assessment hardware and software which have been very well
received by the market. In addition, the company now has over
500,000 teachers signed up to an online community where they can
download and exchange free and paid for content.
Realise
The prospects for the company continue to be strong,
with interactive collaboration technologies in less than 10% of
classrooms worldwide but now in around 80% of UK classrooms, and
25-30% of US classrooms.
The US and rest-of-world markets (excluding the UK) continue to
grow very strongly with many governments now actively looking at
large scale interactive collaboration technology investments. In
particular, many countries in Continental Europe showed strong
growth in 2009 and look to be on an encouraging adoption path.
At the end of 2009, Promethean was planning for a stock market
flotation in order to give it greater visibility to international
investors and enable Apax Funds to realise its stake. Before going
to print, the IPO was realised, making Promethean the first
technology company to list on the main market in the UK for 18
months.
On IPO, Apax Funds exited its entire 25% shareholding and
Promethean used the proceeds to repay existing debt and establish a
modest net cash position for the Group.
We are proud that Promethean has become that rare thing, an
innovative British company that is truly competitive on the
international stage and we wish the business every success for the
future.