A large apprenticeship provider has been sold to another private equity-backed group amid substantial losses and a pricey government investigation into historic traineeship subcontracting “wrongdoing”.
Babington was today taken over by Knovia Group, which currently includes competing apprenticeship giant Paragon Skills, as well as businesses called Shaping Lives, and Tempdent.
It comes a month after newly published accounts for Babington show that losses after tax grew from £3.8 million in 2023 to £5.1 million last year.
The financial statements also revealed the Department for Education is currently investigating claims of “learner data manipulation” and “recycled learner details” by unnamed subcontracted traineeship providers of Babington between 2019 and 2021.
The investigation is ongoing, but as Babington was the primary contracting party, any “funds recovery / clawback for subcontractor errors or wrongdoing, would be claimed against Babington”.
Babington has set aside almost £2 million for “potential maximum liability”.
Babington was sold by RJD Partners in December 2022 to Unigestion, a Switzerland-based private equity firm, and has been restructuring ever since in response to “the worsening financial performance” of the company.
Staff numbers have reduced from 405 to around 280, and the provider has exited adult education delivery including skills bootcamps.
In May 2023, months after the Unigestion takeover, then-CEO David Marsh left Babington and was replaced by turnaround specialist Mark Basham. But Basham only stayed until February 2024, leaving the company for “personal reasons”. He was then replaced as CEO by Babington’s chief operating officer Jen Bramley.
Babington’s latest accounts included forecasts that show a “return to both profitability and cash generation” while funding required to “deliver the base case, together with contingency for substantial downside scenarios,” had been committed by Unigestion.
Babington has now joined Knovia Group, which is backed by Sovereign Capital Partners, a UK private equity “buy and build” specialist.
A spokesperson said that following the transaction, Unigestion will own a “minority stake in Knovia alongside Sovereign and the management team”.
Bramley said she was “delighted” with the deal which will allow Babington to “leverage Knovia’s robust platform for growth and innovation”.
She added: “Our shared commitment to excellence and impact demonstrates why joining Knovia is a fantastic next step for Babington, and I look forward to achieving great things together.”
Babington has been delivering training for around 50 years, currently delivering to 4,800 apprentices and commercial learners across England, Scotland and Northern Ireland in areas like accountancy, HR and leadership and management, IT, and business administration.
As part of this new “partnership”, Paragon Skills’ professional services provision will “transition to Babington, allowing both businesses to sharpen their unique sector expertise and enhance learner outcomes”.
Paragon mainly delivers apprenticeships in care, early years, accountancy, business administration, automotive and leadership and management.
Mark Botha, CEO of Knovia Group and Paragon Skills, said: “I am truly thrilled to welcome Babington into the Knovia Group. Their rich 50-year heritage, unwavering dedication to quality and innovation resonates deeply with our core mission of impact, change, and growth.
“Together, we will create meaningful change and provide career-boosting outcomes for learners, customers, businesses, and the industries we serve. This partnership is a powerful opportunity to expand our reach, enhance our services, and invest in the future of vocational training.”
Last month’s apprenticeship data release for 2023/24 showed that Paragon recorded an overall qualification achievement rate of 47.7 per cent while Babington scored 48.7 per cent. The sector average QAR was 60.5 per cent.
Both providers are judged ‘good’ by Ofsted.
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