Higher education

Laureate Education climbs 14% after offloading Australasian portfolio for $643m

Laureate Education has sold its Australia and New Zealand portfolio to Strategic Education for $643 million, as the US-listed private university operator continues apace with its divestment strategy.

The all-cash transaction, which has been approved by both companies’ boards but is subject to “potential adjustments”, will see US-based Strategic Education take control of Torrens University Australia, Think Education and Media Design School, which collectively cater to more than 19,000 students. university Honoris United Universities, the pan-African higher education group backed by private equity firm Actis, has acquired Nile University Nigeria, expanding into West Africa.

Established in 2009, Nile University of Nigeria is fully accredited and offers a range of undergraduate and postgraduate programmes in arts and social scienes, engineering, law, management sciences, natural and applied sciences, and medical and health sciences.

The acquisition by Honoris, which is three years old, brings its number of institutions to 11, whose 60 campuses

Following the transaction, which is expected to close in the first quarter of next year, Strategic Education will serve nearly 110,000 students across more than 85 campuses in the US, Australia and New Zealand.

After the deal was announced, Laureate climbed 14% while Strategic Education tumbled 17%.

Strategic Education said that the transaction will diversify its offering outside of the US and “be immediately, and significantly, accretive” to earnings. are located in 10 countries spread across 32 cities and collectively educate 45,000 students.

With the largest population and economy in Africa, Nigeria is poised to “lead a new generation of African leaders and professionals”, Honoris said in a statement.

Nile University of Nigeria’s medical school will bolster Honoris’ medical simulation centre in Tunis, the firm said, which trains more than 3,500 students and upskills healthcare professionals.

Honoris said that it offers more than 280 degrees.

Karl McDonnell, chief executive of Strategic Education, said: “By combining our expertise in digital education with Australia’s only investor-funded university, we will create a formidable growth platform that will enable us to pursue our mission of enabling economic mobility throughout the Oceania and Asian regions.”

BofA Securities acted as financial advisor to Strategic Education and Hogan Lovells provided legal advice.

The transaction represents the latest link in a chain of Skema Business School has signed two new strategic agreements with two Chinese academic institutions: Nanjing Audit University and Xian’ Jiaotong University, a member of the Chinese Ivy League, the nine largest universities in the country.

With Nanjing, Skema has created a joint school and with Xian’ Jiaotong, a master’s degree in entrepreneurship and innovation focused on data management and artificial intelligence.

The NAU-SKEMA Institute will start recruiting its first cohort of around 300 students in China in September through the Gaokao. They will follow a four-year fulltime undergraduate course, which includes four hybrid courses of divestments by Laureate, which has in recent years offloaded universities across Asia and elsewhere to clear from its balance sheet debt incurred by its former private equity owners.

Earlier, it was reported that Laureate was considering selling its assets in Brazil.

In March, the company sold its Malaysian portfolio to Hong Kong-based HOPE Education for $140 million.

In 2015, Laureate’s debt-toequity ratio stood at 13. Now,

Actis-backed Honoris acquires Nigerian

Skema creates joint school in China

this figure stands at 0.83. study that offer students a variety of possible career paths: financial engineering, audit, information management and information systems management, and engineering management.

Alice Guilhon, Skema’s managing director, said: “These joint cooperation projects contribute to deepening educational exchanges between France and China and I am happy that Skema finds its place in them. They are also a strong link in the school’s SKY25 strategic plan to pursue its international development, which is based, in parallel with the opening of international hubs, on agreements with the best institutions in the world.”

Higher education

Industry reacts to warning that 10% of UK universities could go bust without state bailout

More than a dozen UK universities are at risk of collapse due to widespread losses stemming from the coronavirus crisis, a new study has found.

Losses across the country’s higher education sector could range from £3 billion to £19 billion – or between 7.5% and half of overall annual income – meaning some universities face “a very real prospect” of insolvency unless they are bailed out by government.

Research by the Institute for Fiscal Studies (IFS), a think-tank, found that the financial hit will be unevenly distributed.

High-ranking institutions with high numbers of international students will face the biggest immediate drop in income, but are better positioned to weather losses. Less reputed universities with limited exposure to international students but lower cash reserves are at a higher risk of insolvency, the study found.

Assuming a central estimate of losses totalling £11 billion, the IFS said that 13 universities – comprising around 10% of the market – could end up with negative reserves, requiring bailouts to evade extinction. United Arab Emirates-listed private equity firm Amanat Holdings is to sell Middlesex University Dubai to Study World Education Holding Group, it said in a stock market statement.

Amanat did not disclose financial details of the transaction in a statement to the Dubai Financial Market, on which its shares trade, but said it would “update the market if and when there are any material

While a sector-wide funding injection would likely fail to save the most at-risk universities, a “targeted” bailout of just £140 million could spare institutions from insolvency, the IFS said.

However, some sector commentators poured cold water on the IFS study, which did not name at-risk institutions, suggesting that its estimates are wide of the mark.

Nick Hillman, director of the Higher Education Policy Institute think-tank, was reported as saying that they should be taken with a “lorry load of salt”.

He said: “Unless there is a major second wave of Covid-19, the IFS’s ‘central’ estimate for the short-term financial losses would be better labelled ‘pessimistic’ and their ‘pessimistic’ estimate would be better labelled ‘extreme’.” developments in this regard”.

The transaction is subject to regulatory approvals and an “estimation of final consideration”, said Amanat, which also owns private school operator Taaleem, Abu Dhabi University Holding Company and the property assets of North London Collegiate School’s Dubai offshoot.

Study World, which was founded by Indian businesswoman Vidhya Vinod, operates schools in

Ian Koxvold, head of education strategy at PwC, noted that although universities could go into negative reserves, “this doesn’t mean negative net assets – they are sitting on a lot of property against which they can secure debt”.

He continued: “My experience is that lenders are very keen to support genuine restructuring, and are happy to underwrite mediumterm debt to enable this.”

Glynne Stanfield, partner at law firm Eversheds Sutherland, which counts a number of UK universities as clients, was less optimistic, however.

He said that “I do think that the [IFS’s] forecasts are credible and perhaps even a little optimistic”.

According to Stanfield, a “number of factors will come into play”, including universities’ reliance on income from overseas students; the number of deferrals by UK and European students; and institutions’ reserves, such as cash, buildings and other assets.

He stressed that while the IFS has set out potential scenarios for UK universities, “we should also bear in mind that the Welsh, Scottish and Northern Irish Dubai, India, Sri Lanka and Malta.

Middlesex University Dubai launched in 2005 and has more than 3,500 students from more than 100 countries.

Amanat acquired the campus in 2018 for around $100 million, according to reports, from the liquidators of scandal-warped buyout house Abraaj, the university’s former owner.

One advisor was “surprised” that Amanat had decided to exit universities may do something different to [those in] England”.

He added that around eight to 10 private investors – some from outside the UK – “want to invest in UK higher education, so you could argue that the costs of saving atrisk universities may be negligible because it is a risk that the private sector is keen to take on”.

Stanfield continued: “Thus, ignoring state bailouts, the small number of universities mentioned in the [IFS] report might be better placed looking to private sector options, such as partnerships along the lines of Richmond University”, which was bought by a Chinese investor in April after flirting with bankruptcy.

Julie Mercer, partner at education-focused strategic consultancy Cairneagle Associates, said she expects that “more than 13” universities are at risk of bankruptcy.

She said that recent data showcasing an uptick of 1% in acceptances by universities – which ratings agency Moody’s said was a testament to their “resilience” – “no doubt hides the winners and losers” as this was an

United Arab Emirates: Amanat confirms sale of Middlesex University Dubai to Study World

across-the-board finding. the company after just two years, given that private equity holding periods typically span four-toseven years.

“They’ve held the asset for a very short time,” the advisor said, noting that “Study World owns a few other branch campuses and is consolidating”.

Amanat’s chief executive, Mohamad Hamade, did not respond to a request for comment by the time of publication.

Further education & skills training

China: TAL sees online revenues rise but records first-ever loss as Covid-19 cripples centre-based business

The world’s largest education company now derives nearly a fifth of its revenues from digital courses, compared to just 7% two years ago, evidencing the growing importance of online tuition in centre-based providers’ business models.

TAL Education Group, the afterschool tuition provider which is worth $40 billion, based in China but listed in New York, said in its annual report for the fiscal year 2020 that online courses generated 18.9% of its total net revenues.

This was up from 7% in 2018 and 13.3% last year – highlighting how online education is an expanding source of income at the centrebased organisation, which operates thousands of brick-and-mortar tuition venues across mainland China.

Still, face-to-face provision accounts for the majority of TAL’s revenues, 35% of which are derived from tuition centres in five Chinese cities – Beijing, Shanghai, Guangzhou, Shenzhen and Nanjing.

But, for the first time since floating on the New York Stock Exchange in 2010, TAL recorded a net loss in the fiscal year 2020, totalling $110.2 million – despite a 28% increase in revenues to $3.27 billion – which it attributed to “many factors”.

These included new investments and acquisitions, which “may cause our margins to decline before we successfully integrate the acquired businesses”, and a “significant increase” in operating expenses, as well as adverse effects of the coronavirus pandemic.

“Our ability to return to or maintain profitability and maintain or improve margins is affected by various factors that are beyond our control, such as the Covid-19 pandemic,” TAL said in its report.

Year-to-date, TAL’s share price is up 38% at $68.38.

The Covid-19 outbreak prompted authorities in China to close all educational centres, along with most other businesses, in February, which has meant that in-person tuition providers, like TAL, have lost income from students who did not transfer to online classes.

“Our business has been and is likely to continue to be materially adversely affected by the outbreak of Covid-19,” said TAL.

The company added, though, that “we believe that the decrease in revenues from offline learning centres will be partially offset by the increase in online revenues”.

However, despite issuing refunds and compensation and offering online alternatives, “there still could be cases of customer dissatisfaction and complaints as a result of the drastic changes”, said TAL.

Earlier, rival organisation New Oriental, which is also based in China but listed in New York, announced that it would take on $300 million of debt for “general corporate purposes”, though a source suggested the money would be spent on short-term debt repayments.

Permira acquires Chinese division of EF Education First

Global investment firm Permira and EF Education First announced that a company backed by the Permira Funds has agreed to acquire a majority stake in the EF Kids & Teens business headquartered in Switzerland with schools in China and Indonesia.

EF will retain a significant ownership in the Kids & Teens business. With over 20 years of operations, EF Kids & Teens is a in premium English-language education provider with 288 schools across 62 cities in China and 79 schools in Indonesia and one of the largest networks of international teachers.

Over the past few months, EF Kids & Teens says it has helped hundreds of thousands of students learn online through EF’s proprietary learning platform and live EF teachers from around the world.

This strategic partnership aims to accelerate EF Kids & Teens’ growth. The company plans to expand the school network, invest heavily in academic programmes and deliver more innovations.

Robin Bell-Jones, partner at Permira added: “China has emerged as the world’s largest and most advanced market for educational services and Permira is a firm believer in the importance of highquality education powered by technology. This exciting partnership builds on Permira’s successful track record of backing entrepreneurs in Asia and growth investments in education and ed tech, with Curriculum Associates and Renaissance Learning in the US and Universidad Europea in Europe. We have long admired EF Kids & Teens’ relentless focus on product and service quality, which together with its impressive online innovations, position the business optimally in a hybrid learning world. We concluded that there is simply no better way for a child to learn English and look forward to being a long-term partner to EF Kids & Teens.”

The transaction is subject to customary conditions.

Further education & skills training

UK: Apprenticeship starts fall 60%, delivering blow to Treasury’s training-driven recovery plan

Apprenticeship starts in the UK in May were down 60% year-on-year, a statistic that will be unwelcomed by the government as it places skills training at the centre of its plan for economic recovery from Covid-19.

Boris Johnson’s pledge of an apprenticeship for every young person is under threat as data from the Department for Education shows that starts for those aged 16-18 were 79% lower than in May last year.

The figures demonstrate the crippling impact of pandemic-linked lockdown measures on employers’ ability to implement new workplace training initiatives.

At the same time, they make for bleak reading for providers and investors in the apprenticeship and KKR is buying a majority stake in Spanish vocational training provider MasterD in a deal that will bolster the private equity pioneer’s global education portfolio.

The firm’s founder Luiz Gomez and MasterD’s management team will reinvest alongside the $36 billion listed asset manager, which is said to have valued the company at ¤150 million, including debt, Bloomberg reports.

A well-placed source told this KnowFully Learning Group, a provider of continuing professional education and exam preparation courses to the healthcare, accounting and finance sectors, announced it has acquired CME Outfitters (CMEO), an accredited provider of continuing medical education. training sector, which had already seen a decline in starts prior to the Covid-19 outbreak.

Since April 2017, apprenticeship training in England has been funded by what is essentially a tax on large employers with wage bills in excess of £3 million, requiring them to set aside 0.5% of salary costs each month.

The scheme has increased flexibility around the kind of training on which employers can spend levy funds but has failed to drive up the number of apprenticeship starts.

Between 23 March and the end of June, British organisations reported 34,690 apprenticeship starts – 52.3% lower year-over-year. publication that MasterD, which providers more than 280 courses to over 50,000 people in Spain and Portugal via its online platform, records annual EBITDA of ¤10-15 million.

KKR is investing in MasterD through its first Global Impact Fund, which closed at $1.3 billion earlier this year and seeks to capitalise on a burgeoning trend in which socially responsible investments focus on climate change, clean water and workforce development.

Since its founding in 2002, Bethesda, Maryland-based CMEO has offered education and resources to clinicians and patients around the globe, as well as accreditation services for non-accredited organisations. CMEO focuses on educating community-based primary care and specialty providers and has

Lockdown measures linked to the coronavirus conundrum have made it difficult – impossible, in some cases – to provide training that requires elements of face-toface instruction or work experience.

The challenges and decreased number of starts follow chancellor Rishi Sunak’s summer statement, in which he announced that the Treasury will pay employers £2,000 for each new apprentice under 25, and £1,500 for each over that age.

This is part of wider efforts to mitigate unemployment stemming from the pandemic, which forecasts suggest could put 15% of the UK population out of work.

DfE data shows that most new apprenticeships are being undertaken

“MasterD is helping address a critical societal challenge in improving employability and skills, which aligns very strongly with the objectives of KKR’s strategy around impact investing,” Stanislas de Joussineau, KKR’s head of global impact for Europe, the Middle East and Africa, said in the statement.

The transaction will see KKR expand its footprint in the global education arena, in which it broad expertise across psychiatry, neurology, gastroenterology, dermatology, rheumatology, virology, respiratory, cardiology, endocrinology, and oncology.

CMEO also provides pharmacy, nursing, and dental continuing education credits. Educational delivery formats include live and by people aged 25 and above.

Learners in this cohort comprised 64.9% of new starts between 23 March and 30 June – rising from 56.5% in the same period of last year.

Higher – or university-level – apprenticeships, some of which are equivalent to MBAs, accounted for 33.1% of starts between 23 March and 30 June, up from 18.2% a year prior.

In April, it was reported that the government was poised to axe MBAlevel apprenticeships amid concerns that the levy scheme – designed to get younger, less experienced people into work – was being exploited by employers to upskill senior

Spain: Private equity pioneer KKR acquires training firm MasterD in €150m deal

executives. already controls US-based digital reading platform OverDrive, which it acquired in January, and India’s EuroKids International.

Founded in 1976 by cousins Henry Kravis and George Roberts, and Jerome Kohlberg, KKR is widely regarded as the pioneer of leveraged buyouts.

Listed on the New York Stock Exchange, it is one of the world’s largest private equity companies, managing some $150 billion

US: KnowFully acquires CME Outfitters

of assets. on-demand online educational activities, medical simulations, interactive infographics, surgical skills workshops, and live symposia.

CMEO co-founders and Managing Partners Jan Perez and Shari Tordoff, as well as the rest of the management team, will continue to lead the CMEO business.