Gustavo Ballvé on March 11th, 2011
Corporate Strategy, Education, Food for thought, Home, Industries

High-profile article on Valor (alternative link found here) on Thursday about how Laureate Education is ready to invest R$ 1.1 billion in Brazil by 2015 (some US$ 660 million). Understandably, the part most likely to “stick” is the “we will triple enrollment” bit. We’ve been following Laureate since 2002, when it was still a part of the Sylvan Learning Systems group (later split up into Laureate Education and Educate, Inc.), and even invested in the stock for a while until its “MBO” in 2007 (it was taken private in a management-led leveraged buy-out), so we found the story even more interesting.

First, we know by covering the company that Laureate, as the Brazilian CEO Luis López says in the article, really does focus on assets of higher quality than those currently operated or sought out by most of the Brazilian listed players in the field. We’ve even visited some of those colleges run by Mr. López at a time when the Mexican and Chilean operations were the company’s largest and best. In fact, when Mr. López started running the Brazilian operations, we saw it as a telling sign of Brazil’s importance to the group.

That fact combined with the company’s declared spend amount and mandate could make acquisition prices soar, even though the company focuses on assets that may not be on the local players’ sights. Think of Laureate’s growth-by-M&A focus as a tide that could lift all ships. What’s more, the tide must already be pretty high given that listed Brazilian players have been raising capital and expanding their war chests with the very specific mandate of delivering growth by acquisitions…

The point? Paraphrasing that famous question: “At what price growth?”

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