Nerdy to Become Public Company via Business Combination with TPG Pace Tech Opportunities (PACE)

January 29, 2021 7:31 AM EST

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Nerdy Inc. (“the Company” or “Nerdy”), a leading direct-to-consumer, curated gig economy platform for live online learning benefiting both learners and experts, has entered into an agreement to become a public company through a business combination with TPG Pace Tech Opportunities (NYSE: PACE), a publicly traded special purpose acquisition company.

Nerdy has built a comprehensive online learning destination that enables the delivery of scaled, high-quality live learning for people of all ages across thousands of subjects and multiple learning formats. Nerdy’s multi-format learning destination covers more than 3,000 subjects and includes one-on-one instruction, live small and large group classes and adaptive self-study tools. Nerdy’s proprietary platform leverages AI and a rich database of past learning interactions to source, evaluate and match top experts to learners, ensuring a high-quality experience on both sides of the network. Nerdy’s marketplace offers experts flexibility and collaborative tools for connecting with learners, and the opportunity to earn income from the convenience of home.

“We have built a proprietary AI-driven multi-format learning destination, leveraging the strong foundation of our flagship business, Varsity Tutors, one of the nation’s leading platforms for live online tutoring,” said Chuck Cohn, Founder, Chairman and Chief Executive Officer of Nerdy. “What is so unique about what we have done is scale quality across thousands of subjects, multiple learning formats and tens of thousands of experts. Our direct-to-consumer, curated gig economy model allows us to deliver a high-quality learning experience at scale. We’re transforming how people learn at all age levels, from kindergarten to professional. With our new partners at TPG, we anticipate further investing in growth and expanding the breadth and reach of our platform.”

“TPG has a proven track record of helping high-growth, disruptive technology companies like Nerdy successfully transition to the public equity markets,” said Karl Peterson, Chairman of TPG Pace Tech Opportunities and Managing Partner of TPG Pace Group. “Our experience identifying markets at inflection points and supporting disruptive high-growth companies, as well as our extensive public market experience, enables us to aid Nerdy in its growth journey. Nerdy is poised to breakout as it disrupts a large market where online adoption has lagged. We look forward to collaborating with Chuck and the talented Nerdy team in their transition to the public equity markets.”

TPG also has deep experience in enabling marketplace businesses to scale and transitioning companies from the private to public market, having helped take 56 companies public since 2011, including Airbnb, Spotify and Uber. With that expertise, the firm launched the TPG Pace Group in 2015 to sponsor SPACs and other permanent capital solutions for companies driving positive change and has successfully completed five SPAC IPOs to date.

“Nerdy is a leading gig economy marketplace delivering live personalized learning at scale,” said Greg Mrva, President of TPG Pace Tech Opportunities. “Nerdy’s product expansion and focus on scaling quality through AI and machine learning, combined with the powerful network effect benefits of its unique network of both experts and learners is driving outstanding momentum through accelerated user and engagement growth.”

“Online learning has reached a tipping point, similar to where e-commerce was 15 years ago,” said Rob Hutter, Managing Partner at Learn Capital. "Advancements in technology have made it possible to shift the approximately $1.3 trillion global direct-to-consumer learning market from offline to online. We’re further augmenting our investment in Nerdy to help expand its online market leadership position and fundamentally change how people learn.”

In addition to paid products, Nerdy offers free live large-format online classes that are interactive and can accommodate from 500 to 50,000 learners. In 2020, over 500,000 learners experienced over three million hours of free live online instruction, including classes taught by celebrity scientists, astronauts and wildlife experts at no cost to learners. Nerdy’s library of hundreds of thousands of online diagnostic tests and practice problems are offered completely free for learners to improve their knowledge.

The breadth of Nerdy’s platform enables long-term relationships with cross format engagement across the entirety of the learning lifecycle – resulting in high customer satisfaction as evidenced by Nerdy’s 68 NPS. Nerdy’s core paid solutions and free resources improve access and lower cost barriers to accessing high-quality instruction. Nerdy is committed to transforming how people learn through technology and making high-quality personalized learning accessible to all.

Nerdy’s annualized revenue surpassed $120 million in the second half of 2020. In the fourth quarter of 2020, the company achieved 87% online revenue growth, 59% online paid active learner growth and 169% paid online sessions growth, year over year.

The business combination values Nerdy at a post-money equity value of approximately $1.7 billion. Upon closing of the transaction, and assuming no redemptions by TPG Pace Tech Opportunities stockholders, Nerdy is expected to have approximately $300 million in cash.

The company is expected to become a public company with significant growth capital, including a fully committed PIPE, which includes leading institutional investors Franklin Templeton, Healthcare of Ontario Pension Plan, Koch Industries and Learn Capital. Mr. Cohn and other company management will remain as significant stockholders in the company, with Mr. Cohn remaining the largest individual stockholder.

TPG Pace Tech Opportunities raised $450 million through an initial public offering along with $150 million of forward purchase agreements for the purpose of entering into a merger, stock purchase or similar business combination with one or more businesses. Upon closing of the transaction, TPG Pace Tech Opportunities will redomicile as a Delaware corporation and be renamed Nerdy, Inc. Its shares of Class A common stock and warrants are expected to be listed on the New York Stock Exchange (the “NYSE”) under the ticker symbol “NRDY” and “NRDY WS,” respectively. Upon closing, Nerdy is expected to have a seven-person board composed of a majority independent directors and will continue to be led by Nerdy’s existing management team, which brings deep technology, consumer brand and e-commerce experience.

Cash proceeds raised in the transaction will be used to fund operations, support growth and expand the Nerdy platform.

The transaction is subject to approval by TPG Pace Tech Opportunities shareholders and other customary closing conditions. The transaction is expected to close in early Q2-2021.

Advisors

Goldman Sachs & Co. LLC acted as exclusive financial advisor to Nerdy. Deutsche Bank Securities Inc., J.P. Morgan Securities LLC, Barclays Capital Inc. and TPG Capital BD, LLC acted as financial advisors, capital markets advisors and PIPE placement agents to TPG Pace Tech Opportunities. Goodwin Procter LLP acted as the legal advisor to Nerdy and Vinson & Elkins L.L.P. acted as the legal advisor to TPG Pace Tech Opportunities.

Investor Webcast and Presentation Information

At 10:00 am EST on January 29, 2021, TPG Pace Tech Opportunities will be holding an investor conference call. For those who wish to participate, the domestic toll-free access number is +1 833-470-1428 and the international access number is +1 404-975-4839. Once connected with the operator, please provide the Conference ID number of 529461 and request access to the Nerdy Transaction Announcement Investor Call.

A replay of the call will also be available from 6:00 pm EST on January 29, 2021 to 11:59 pm EST on February 28, 2021. To access the replay, go to https://www.netroadshow.com/ and enter the Entry Code: digital129.

All investor materials, including a copy of the investor presentation, can be found at https://www.tpg.com/pace-tech-opportunities.



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