Shares in edtech OpenLearning rise on appointment of M&A advisor IBIS Capital

Shares in edtech OpenLearning rise on appointment of M&A advisor IBIS Capital

OpenLearning co-founder and CEO Adam Brimo.

Shares in education software as a service (SaaS) business OpenLearning (ASX: OLL) have jumped by over a quarter following today’s announcement that the company has commenced a strategic review.

However, the rise should be considered in the context of recent price movements for OLL, which was trading at 6 cents per share as recently as late-April and 16 cents per share in August last year.

After “being approached by interested parties”, the Sydney-based company has appointed investment and corporate finance advisory firm IBIS Capital to help it asses the shareholder value of a potential deal.

As well as providing investment to fast-growing companies, London-based IBIS Capital specialises in buy-out opportunities of established companies across the media, technology, and, most notably, education sectors.

The firm operates two special purpose acquisition companies (SPACs) listed on the NASDAQ; both formed to acquire education technology businesses. EdtechX Holdings Acquisition Corp II (NASDAQ: EDTXU) raised $100 million in 2020 but remains idle, whereas the first SPAC merged with Chinese education company Meten Education in October 2018.

“OpenLearning is one of the largest and most recognised lifelong learning platforms in Australia and Southeast Asia, enabling over 250 education providers to deliver high-quality courses to over three million learners,” OpenLearning Group CEO & managing director Adam Brimo said.

“OpenLearning is well-positioned to continue delivering organic growth, and this process will explore all options for achieving sustainable growth and supporting our clients while maximising shareholder value.

“The company does not consider that this announcement regarding the commencement of the strategic review process is financially material; however, it is considered strategically significant as it may impact the company’s operations, and the company wants to ensure that all shareholders are equally informed.”

The board of directors has provided no assurance that it will pursue a transaction following the strategic review, but that hasn’t stopped the higher education technology company from becoming one of the top gainers on the ASX today.

Founded in 2012, OpenLearning provides a scalable online learning platform to education providers and a global marketplace of courses for learners. To date, more than 3.2 million students from 190 countries have accessed a course through its 184 education provider partners.

Headquartered in Surry Hills, the e-learning provider has a regional office in Kuala Lumpur, Malaysia and support teams based in New York and Slovenia.

The business is the brainchild of OpenLearning CEO Adam Brimo, 2020’s Trailblazer Award winner at the Sydney Young Entrepreneur Awards, who partnered with Professor Richard Buckland and classmate, current CTO and co-founder David Collien to increase access to quality education.

Brimo, who completed Bachelor of Engineering (Software) and a Bachelor of Arts (Politics) degrees at UNSW, previously worked as a software engineer at Macquarie (ASX: MQG) and Westpac (ASX: WBC) before setting up the business.  

OpenLearning’s most recent quarterly update, released at the end of April, revealed annual recurring revenue reached $1.5 million for the year, up 5 per cent from 2021, as platform revenue increased 58 per cent year-on-year to $652,000.

The business’ total unique users grew by more than 80,000 as it instigated a material change to its product pricing as part of its platform subscription.

Previously, OpenLearning had over 300 educators subscribed to legacy SaaS plans at around $200 per year. In Q1 FY22, OpenLearning discontinued these legacy SaaS plans and required all education providers to subscribe to a new plan with a starting price of approximately $1,250 per year.

Shares in OpenLearning (ASX: OLL) are up 25.71 per cent to $0.044 per share at 1.17 pm AEST.

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