Shaw Academy to exit examinership with €7m investment

A Dublin-based low-cost higher education provider will successfully exit examinership today having secured more than €7 million in new investment.

Shaw Academy, an online education platform, had its scheme approved in the High Court on Friday. Its backers will now include: former Virgin Group chief executive Stephen Murphy, Setanta Sports co-founder Michael O'Rourke, Folens Publishing, and Beach Point Capital.

Shaw develops accredited online courses such as photography, nutrition, marketing and technology, and has secured €7.15 million investment from the backers, something it saw as an “endorsement” of its potential.

Established in 2012, Shaw has taught more than five million students in courses accredited at level five on the European Qualifications Framework. It employs 66 people between its offices in Dublin, Bangalore and Cape Town.

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At the court hearing on Friday, Mr Justice Denis McDonald congratulated the examiner on “achieving the result he has” and on what he described as an “excellent outcome”.

"The company is very satisfied with the outcome," its founder and chief executive James Egan told The Irish Times. "It gives the company the ability to protect all jobs and continue to supply higher education at lower cost for all of those students globally."

Having rapidly expanded between 2015 and 2017, Shaw Academy encountered financial difficulties after drawing down €4.65 million of a loan from Columbia Lake Partners, a venture debt provider based in London.

After sourcing the funding, the Irish company started a crowdfunding process to raise equity and bring retail investors into the group. The equity raise didn’t proceed successfully and, as a result of insufficient investment in marketing, revenues in the company started to decline.

‘Firm footing’

Investment offers were received from several parties including a private equity fund, a family office and a number of venture capital companies. One party offered to provide a €10 million investment to the group, which was subsequently revised to just under €6 million. The offer required Shaw to operate under an exclusivity arrangement while the company performed due diligence, prohibiting the directors from speaking to other investors.

The fund ultimately chose not to proceed with the investment, which left Shaw with limited time to solve its low cash balance issues.

On January 2nd of this year, Columbia Lake Partners issued a demand for Shaw to immediately repay more than €5.5 million, a sum which represented the principal, interest and repayment fees due to the debt provider.

Shaw sought to enter examinership on January 9th led by Grant Thornton's Stephen Tennant, the result of which was a debt writedown supported by Columbia.

While Mr Egan couldn’t comment on the extent of the writedown, he noted that the return to the senior secured creditor achieved was “significantly greater than a liquidation event”. Revenue was another creditor, and received “at or above market rates”, Mr Egan added.

“I view this transaction and this event as putting the company on a firm footing and re-aligning the balance sheet of the company,” he said.

Other investors in the company include David Brown, the co-founder of Oxford International Education Group, Neil Balnaves, an Australian investor with media experience, and Sean Tai, an education investor.