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Kahoot shares surge after General Atlantic buys 15% stake

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Kahoot shares surged on Friday after private equity group General Atlantic agreed to buy a 15 per cent stake in the online education provider.

The Norwegian group said General Atlantic would buy the stake from SB Northstar, a troubled fund owned by Japanese conglomerate SoftBank.

Shares in Kahoot rose as much as 28 per cent to NKr23 in morning trading on Friday, although they are still less than half their level at the start of the year.

The sale of Northstar’s stake follows a tumultuous period for the SoftBank vehicle. The Japanese group has liquidated almost all of the holdings in its internal hedge fund after racking up between $6bn and $7bn in losses.

Kahoot said its partnership with General Atlantic would “accelerate further growth initiatives, drive innovation and expand its global footprint in homes, schools and corporations”.

The Oslo-based company offers online educational games and quizzes for schools, families and businesses.

“The team at General Atlantic brings deep experience in scaling global education technology and software businesses and positioning market leaders for long-term success,” said chief executive Eilert Hanoa.

Kahoot was one of the last remaining positions for SoftBank’s abortive internal hedge fund Northstar, which is being wound down.

Akshay Naheta, the former Deutsche Bank trader who ran Northstar and earned notoriety for spearheading SoftBank’s bet on fraudulent payments company Wirecard, left the group in April.

Nordea Bank estimated that SoftBank purchased shares in Kahoot at an “average price of Nkr63” a share, “so based on yesterday’s close that implies a loss of more than 70 per cent”.

“A potential selldown from SoftBank has continued to pressure the share and we also believe it will be positive for Kahoot to have a new long-term investor that can support its growth journey,” said Kristoffer Bollestad Pedersen, a senior analyst at Nordea. “Consequently, we expect the share to trade up significantly today.”

Chris Caulkin, managing director and head of technology for Europe, the Middle East and Africa at General Atlantic, said Kahoot had “significant potential for further growth as digital learning solutions continue to be adopted across its work, school and home markets”.

The deal remains subject to regulatory conditions. If approved by shareholders, Caulkin is expected to join the Kahoot board and following the completion of the transaction, General Atlantic is expected to become the education provider’s largest shareholder.

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