It was almost a year ago that Laureate Education, which is a public benefit education company and owns the nation’s largest group of for-profit colleges, made the move in order to go public. According to the sources Laureate is disposing of its India business, including Pearl Academy of Fashion, Design and Media, including University of Petroleum and Energy Studies (UPES) in Dehradun — all worth Rs 2,500 crore.
With about a million students in over 23 countries, the organisation has built a prominence as an overpowering force on the international platform. But during the recent months, the organization has been disposing its assets from around the world.
Earlier in this month, the Baltimore-based Laureate sold out its Chicago-based Kendall College for $1 to the National Louis University, which is a private not for profit institution. Laureate also assented to pay National Louis up to $14 million in order to aid the construction of culinary as well as hospitality program facilities, as per a corporate filing. Around 1,500 learners are currently registered at Kendall.
The senior vice president for global public affairs at Laureate, Esther Benjamin, told that the organization did a strategic review of its operations and assessed disposing around seven of its distinct and diverse global areas on the bases of the size of those institutions.
“These markets are all of the highest quality yet it is believed that these markets would be better placed in the hands of new purchasers who can take a longer-term horizon in order to achieve the type of scale as well as cash flow gains that these educational organizations can create,” informed Benjamin.
In addition to Kendall, Laureate admitted earlier this month to auction an institute in Morocco — Université Internationale de Casablanca. Also, late during the last year, the organization sold its interest in a university in China, another institution in Malaysia and educational academy in Italy as well as Cyprus.
Laureate has been devising to “streamline” its portfolio of institutions for a while, told Jeff Silber, who is an education financial analyst with BMO Capital Markets, enumerating that the organization didn’t think it would be able to scale up the diagnosed institutions without making considerable investments.
But it cannot be forgotten that the company also remains heavily in debt, with about $3.2 billion of long-term debt as of the end of September. Selling off assets where the organization doesn’t see any growth opportunity is definitely a good move. The selling of assets doesn’t mean Laureate has moved away from its position of a global education company.
Selling of these assets would help in accomplishing two things: #1 It would free up cash which would in turn help to pay off debt and free up the balance sheet. Functioning in smaller, fewer markets would also make the organization more attractive to investors.
Laureate is focusing its efforts and attention in Portugal, Spain, the U.S., & South and Central America.
The organization is going to certainly continue to expand in Brazil, said Serck-Hanssen. They are going to judiciously expand existing campuses, new campuses as well as new ZIP codes under the same management and brand. And that’s going to be a priority for 2019.
As observed, for-profit higher education in the States has had a tough time during the last few years, on the other hand, for-profit higher education globally is still doing a generally good business, and in this environment, Laureate can definitely thrive.