Laureate Education to Sell India Business Valued at Rs 2,500 crore

Laureate Education to Sell India Business Valued at Rs 2,500 crore

November 22, 2018 · news

Laureate Education, arguably the world’s largest for-profit higher education company, is disposing of its India business, including Pearl Academy of fashion, design and media, people familiar with the development said.

Laureate’s India business — which also includes University of Petroleum and Energy Studies (UPES) in Dehradun that offers courses across disciplines including engineering, business and law — is estimated to be worth Rs 2,500 crore, the sources told ET.

The Baltimore-based education giant has roped in consulting firm EY to advise on the disposal of its Indian interests, they said.

Laureate did not respond to ET’s requests for comments as of press time Wednesday.

According to people cited above, Laureate has not been able to extract the economic benefits of its operations in India due to the complicated structure of its business.

Pearl Academy and UPES are run by education societies that are not-for-profit institutions. The societies collect fees from the students enrolled in the institutes, but cannot distribute the surplus or profits generated due to their not-for-profit status.

“There are restrictions on the repatriation of profits from higher education, especially where the institutions are run by not-for-profit entities such as trusts,” said Rohin Kapoor, cofounder of education app Wonk and a member of CII’s national committee on higher education.

“My understanding is that Laureate has not realised the returns they were expecting from the business due to these regulatory challenges”, Kapoor said.

Pearl Academy’s four campuses and UPES collectively have 18,000 students enrolled with them in a diverse range of undergraduate and post-graduate programmes.

Pearl Academy is run by the Delhi-based Creative Arts Education Society while UPES is managed by the Hydrocarbons Education & Research Society. Both were listed as Laureate subsidiaries in its filings with US stock market regulator SEC.

The education giant has spent more than a decade trying to gain a foothold in India.

It first entered the country around 2003 after roping in former Titan COO Jacob Kurien to head its operations. After a failed attempt, it re-entered the country in 2011 by purchasing economic interests in Pearl group entities and thereafter in entities that derive revenues from UPES.

One of the key drivers for Laureate’s persistence with establishing a presence in India was the hope that the higher education sector would get privatised, a former company executive told ET. Its exit plans are a result of failed expectations on this front, the person said.

Its exit plans are also a result of global priorities. Laureate Education has outlined a plan to exit markets in Asia, Europe, Central America and Africa.

The company has initiated a due diligence of the Indian operations, technically termed a vendor due diligence, that will enable prospective buyers to cut short the time taken to study and value its business. All prospective buyers would be given access to the findings of the vendor due diligence report.

Potential buyers could include Laureate’s original partners in India such as the Seth family that runs Pearl Group, a large manufacturer and exporter of textiles and garments, people familiar with the matter told ET.

The global parent was taken private in a leveraged buyout deal spearheaded by PE giant KKR in 2007. The company launched its IPO in the US last year.

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