Private equity and venture capital investment in the global education services sector fell by nearly half to $4.60 billion in 2023, its lowest annual value in three years, according to S&P Global Market intelligence data.
The number of deals declined by 40% to 190, from 317 the previous year. Deal count for 2023 was the lowest since at least 2019.
Pandemic-driven surge slows
Education software saw high investment levels in 2021 and 2022 due to disruptions caused by COVID-19. The pandemic accelerated the adoption of online education, software tools and digital supplements across K-12, higher education and corporate training, said Chris Ross, a principal at EY-Parthenon. The market weakened in 2023 as investors began prioritizing quality deals amid a tighter interest rate environment.
Investment in the sector is on track to slow even more this year. In the first quarter, the total of education investments — including whole company and minority stake acquisitions, asset deals and funding rounds — came in at $260 million, compared to $280 million in the year-ago period. The number of deals declined to 34, from 56 in the first quarter of 2023.
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Largest deals
Swedish private equity firm EQT AB (publ) has invested in the top two deals targeting global education services companies since January 2023. The largest private equity-backed deal was the privatization of Japan-based Benesse Holdings Inc. for roughly $1.32 billion by an investor group that included EQT Private Capital Asia, EFU Investments Ltd. and Baring Private Equity Asia Fund VIII. That was followed by the acquisition of US-headquartered IMG Academy LLC, a provider of sports education services, for $1.25 billion by an investor group that included Nord Anglia Education Inc. and EQT Private Capital Asia.
EQT in April agreed to acquire a majority interest in Europa University Education Group SL, a private higher education platform in Spain and Portugal.
"Increasing access to higher education is a priority for governments worldwide, with robust demand for private higher education to help complement public options in Europe and to support the employability of young graduates," EQT said in a release announcing the deal.
2024 outlook