Deal will give Nerdy equity value of about $1.7 billion. PIPE investors include Franklin Templeton, Learn Capital.

Online education platform Nerdy Inc. has agreed to go public through a merger with a blank-check company backed by private equity firm TPG.

The transaction with TPG Pace Tech Opportunities Corp. will give Nerdy an equity value of about $1.7 billion, according to the companies.

The deal will provide as much as $750 million in cash proceeds, including $150 million in an oversubscribed private investment in public equity, or PIPE, they said. Investors in the PIPE include Franklin Templeton, Healthcare of Ontario Pension Plan, Koch Industries and Learn Capital.

Nerdy will have about $300 million in cash and is expected to trade on the New York Stock Exchange under the symbol NRDY, the companies said. The deal is expected to close early in the second quarter.

St. Louis-based Nerdy offers online tutoring and classes, matching students and tutors through its platform, Varsity Tutors. Students either pay as they go or subscribe at a monthly rate, with one popular plan charging $275 a month for 36 hours of instruction, according to the company’s website.

“We are the only company that has figured out how to scale high quality live instruction through a platform,” Nerdy founder and Chief Executive Officer Chuck Cohn said in an interview. “Udemy and Coursera have recorded videos.”

In the second half of 2020, Nerdy had annualized revenue of more than $120 million, the companies said.

Nerdy’s existing investors, which include the Chan Zuckerberg Initiative as well as the firm’s management and Learn Capital, are expected to retain more than half of the company’s ownership.

TPG Pace Tech Opportunities raised $450 million in an initial public offering in October. Unlike some other special purpose acquisition company transactions, the deal with Nerdy will “accelerate something that is clearly working,” Karl Peterson, chairman of TPG Pace Tech Opportunities and managing partner of TPG Pace Group, said in an interview.

“It’s our pattern of recognition and backing winners early like Airbnb and Uber,” Peterson said, “where we saw the exact same characteristics as Nerdy — which is a first mover with incredible advantages against legacy, offline, unimpressive competition and solving very important problems in a new way in a huge market.”


Source: Bloomberg

By Crystal Tse