In a strategic move to enter the world of coaching the next generation of nurses, tertiary education business EDU Holdings (ASX: EDU) has today announced it will acquire Nurse Training Australia (NTA) for $6 million.
To fund the all-cash buyout, EDU has launched a two-tranche capital raise at 13 cents per share for institutional investors, representing a 7.1 per cent discount to the closing price on 30 March.
Property manager Mulpha Australia – which has come on as a new investor – will pay almost $3 million for a 13.8 per cent stake in EDU as part of the raise. The deal will also see Mulpha CEO Greg Shaw - who previously ran Ardent Leisure (ASX: ALG) between 2002 and 2015 - join EDU’s board.
The deal represents a significant purchase for the Sydney-based company, which currently has a market capitalisation of $16.45 million. As part of the agreement, EDU will pay $4.5 million upfront for NTA, with the remaining $1.5 million to be delivered in the next 12 months.
“We have been planning a strategic entry into nurse training for some time now and see the acquisition of NTA as a highly attractive opportunity to expand EDU's offering,” EDU Holdings CEO Adam Davis said.
“There is strong alignment between the businesses, both sharing a commitment to deliver high-quality training and employment outcomes.
“The acquisition is also a catalyst for the group to develop a higher education nursing program, in line with our strategy of creating pathways from vocational to higher education."
Founded in 2013, NTA currently operates from two campuses in the Sydney suburb of Burwood and offers certificate and diploma level courses in health & community services, including nursing.
International students – which primarily come from Nepal, India and the Philippines - represented approximately 85 per cent of NTA's revenue in CY21. Of the 239 foreign students currently studying, roughly half are completing a Diploma of Nursing.
The remainder of NTA’s revenue comes from its domestic students, who are enrolled through a NSW Smart and Skilled government funding program.
For EDU, the purchase marks its entry into the nurse training market and broadens its healthcare education offering six years after it acquired the Australian Learning Group – which runs both aged care training and community and health programs.
The group’s second subsidiary, Proteus Technologies (trading as Ikon Institute of Australia) was purchased for $5.5 million in a cash-and-scrip deal in 2018. Ikon – which has campuses in Adelaide, Brisbane, Melbourne and Sydney - offers courses in art therapy, counselling and early childhood education.
On a proforma CY21 basis, the latest acquisition is anticipated to bolster EDU's revenue by 18 per cent and EBDITA by 65 per cent.
“We look forward to our involvement with EDU and being a supportive shareholder in its strategy of organic and acquisition-led growth, commencing with the proposed acquisition of Nurse Training Australia,” Shaw said.
“Our investment in EDU is consistent with our experience in the education sector where students receive high-quality learning outcomes and career-focused qualifications in partnership with industry operators.”
In conjunction with the announcement, EDU is looking to raise an additional $500,000 via a share purchase plan. Eligible shareholders will be able to subscribe to up to $30,000 of shares without the cost of brokerage fees or commissions.
The acquisition is expected to complete in the third quarter of FY22, subject to satisfaction or waiver of a number of conditions precedent.
EDU’s shares have jumped by 14 per cent on the back of the announcement, reaching $0.16 each at 12:50pm AEST.
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