Palamon gets set for payout with debt deal
PRIVATE equity firm Palamon has completed the refinancing of its English language school group Cambridge Education, the first time in more than a year that a private equity house has effectively tapped British banks to pay itself a dividend on an investment.
Palamon Capital Partners’ deal with Royal Bank of Scotland for a new £23m debt package will see it recoup 1.5 times the equity it has invested in the business, and leaves finances for continued expansion of the group, which provides English language training and university foundation courses for overseas students at its schools in London and around England.
At the peak of the buyouts bubble, so-called dividend recapitalisations were all the rage as private equity firms took advantage of red hot debt markets to refinance their businesses and pay themselves dividends in the process. But they have all but vanished in Britain and Europe as banks rein in lending and become far more cautious about financing private equity-backed firms in particular.
Palamon’s new financing package is the first sterling loan taken out to pay a private equity owner a dividend since 3i Group put in place a £73m package for testings business Environmental Scientifics Group in September 2010.