Nov 6 (Reuters) - Bertelsmann SE & Co said on Friday it was spending $230 million to acquire a minority stake in U.S. learning technology firm HotChalk, the latest move by Europe’s largest media group to grab a bigger slice of the education market.
Bertelsmann, which controls broadcaster RTL and co-owns book publisher Penguin Random House, will become the largest stockholder in the company. The valuation of the funding round was not disclosed.
Reuters previously reported that Bertelsmann was going to lead a funding round that would value the Campbell, California-based company at $600 million to $800 million. The company has an annual growth rate in the double digits.
HotChalk, which launched in 2004, helps non-profit universities and colleges create online graduate degrees and currently supports 33 online degree programs.
Bertelsmann Chairman and CEO Thomas Rabe said in a statement that online services is one of the strategic segments the company wants to focus on in education.
Bertelsmann has recently made education a third pillar of its business alongside media and services, in a bid to grow its presence in the fragmented $5.5 trillion global market for education, in which the biggest single player is Britain’s Pearson. Bertelsmann announced in September that it was creating a new business unit that will be run like a separate company to focus on education with a revenue target of 1 billion euros ($1.1 billion.)
HotChalk is one of a number of companies such as Coursera and Udacity, another Bertelsmann-backed company, that have sprung up in recent years to help bring universities courses online to a greater number of students.
The company added seven customers this year, with three more on the way next year, HotChalk CEO Ed Fields said in an interview. HotChalk works with Concordia University-Portland based in Oregon, which uses it to help run its online master and doctorate of education degree programs.
It’s the largest funding round to date for HotChalk and its last investment since 2012 when venture capital firm Mohr Davidow, a previous investor, put more money into the company.
“We’ve aligned with a global platform, Bertelsmann, to continue to lead the discussion around improving outcomes in education and making sure students get the results they bargained for when they enrolled in university,” Fields said.
Financial advisers on the deal were Morgan Stanley for Bertelsmann and Citigroup Inc for HotChalk.
Last week, Bertelsmann’s online training company, Relias Learning, which it bought for $540 million last year, said it was acquiring Redilearning, a U.S. company that focuses on online training in the senior care sector. (Reporting by Liana B. Baker in New York; Editing by Ken Wills)