ICT accelerates growth strategy with acquisition of multiple online education groups
As part of its global growth strategy, iCollege (ASX:ICT) has signed binding Heads Of Agreements to secure two Australian education businesses with combined FY2014 revenue of over $9M, pushing ICT’s baseline revenue to over $12M.
ICT’s latest picks, Mathisi Pty Ltd and the Management Institute of Australia (MIA), cater for retail and professional development, and come after the company completed share sale agreements to acquire two more education firms – Dynamic Learning Solutions Pty Ltd and The Bookkeeping School Pty Ltd.
ICT is capped at $10M and has embarked on an aggressive acquisition and organic growth strategy to buy up established education businesses, add them to its own mobile optimised online education platform and sell the content globally.
Financial analyst IBIS World says the global education sector is worth $4.4 trillion and that online education, valued at $97BN, is the fastest expanding segment with 20% growth predicted between 2012 and 2017.
ICT adds retail and management to its online education
ICT will pay a total of $10M to acquire MIA and $900,000 to absorb Mathisi. Each Heads of Agreement allows a portion of the total paid up front with the balance geared to EBIT targets. ICT will need to complete a placement and or finance to complete the acquisitions.
Established in 2005, MIA specialises in professional skills development and has developed what it calls “systems driven” online learning course work across 22 industries in Australia, including business, logistics, fitness, aged care and workplace health and safety.
Meanwhile, Brisbane based Mathisi specialises in business and retail qualifications and has been operating for five years. It delivers traineeships and is a Pre-Qualified Supplier for Queensland’s Department of Education, Training and Employment.
Both companies make solid revenues and ICT says their business models can be readily integrated to its iCollege platform and leveraged with this technology. It offers opportunities for expansion, both across Australia and internationally.
ICT to expand its education offerings
ICT says the acquisitions of MIA and Mathisi will provide the company with significantly expanded course offerings, scalable growth opportunities and solid financial earnings to add to its bottom line.
ICT’s Executive Director Ross Cotton says this reaffirms the company’s strategy of expansion through the acquisition of profitable education groups.
“On completion of these transactions, iCollege will be positioned to become a major player in the online education market with baseline revenues of $12.4M and EBIT of $3.8M (based on FY2014),” he says.
Share sale agreements secure two more education groups
ICT has also secured fully binding Share Sale Agreements to acquire two more educators – Dynamic Learning Solutions Pty Ltd (DLS) and The Bookkeeping School Pty Ltd.
The deal with DLS will see that group’s classroom based courses brought online through ICT’s mobile optimised online learning platform. DLS generated $2.98M in revenue and $1M in EBIT for FY2014.
The Bookkeeping School offers online courses in accounting and bookkeeping. Through the acquisition deal, ICT will integrate these courses onto its iCollege platform and work to expand them.
Both companies will be acquired through the acquisition of their issued capital. To help fund these moves, ICT offered a share placement of 3,333,334 shares at $0.15 each that successfully raised $500,000.
Colonial Capital Management Pty Ltd was the lead manager for the raise and the funds will be used to settle the cash portions of each deal.