With so many large media companies like Reed Elsevier and Thomson abandoning education, it is interesting to hear the head of Bertlesmann (BM) sounding like a contrarian investor. Eyebrows were raised when Gunter Thielen, BM’s current Chief Executive and Chairman said recently, ‘Education is a field that fits Bertelsmann well’. BM were known to have been very keen to buy Thomson Education (now known as Cengage) which ended up within OMERS and Apax Capital Partners. BM’s bid was via its minority stake in the €1bn equity fund set up jointly with Citigroup Private Equity and Morgan Stanley Principal Investments.

This vehicle may still be well placed to bid for large deals (compared to many private equity funds) as the leverage within the fund is conservative and is designed to keep the debt from any deals off BM’s balance sheet. However, this structure was really only put in place to allow BM some flexibility in competing for new assets with its existing media competitors and PE funds, due to the €4.5bn of debt BM took on via a share buyback. Even with the fund at its disposal, Thielen has hinted that BM probably won’t make any major acquisitions until well into 2008 - by which time he will have been replaced by Harmut Ostrowski.
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