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Laureate Education raises $383m, forges ahead with IPO plans

Global higher education giant Laureate Education has announced plans to raise $383m through selling stock to a group of investors ahead of a planned initial public offering.

Kendall College, operated by Laureate EducationLaureate Education operates more than 70 education institutions worldwide, including Kendall College in the US (pictured). Photo: Flickr/H. Michael Miley.

Laureate Education will trade under the name LAUR, and the IPO will take place on the Nasdaq exchange

Raising money through the sale of stock was part of a plan to launch an IPO that Laureate disclosed to the US Securities and Exchange Commission more than a year ago.

“We want to best ensure that we always have capital to grow”

The process has since stalled due to financial market tumult and a series of hurdles including changing regulations in foreign markets and a student lawsuit, but the investment and an updated filing with the SEC indicate the company is forging ahead with its plans to go public.

The six-strong group of investors includes Apollo Global Management, owner of McGraw-Hill Education. Apollo also signed a deal last year to take over Apollo Education, which owns for-profit higher education provider BPP.

Also in the group is the Abraaj Group, a Dubai-based private equity firm that previously backed GEMS Education.

The two funds are set to each invest $127m in Laureate in its offering of 400,000 shares.

Laureate Education first registered with the SEC for an IPO in October 2015. At that time, the company said it would sell stock on the public market in order to pay down some of its $4.3bn debt.

However, challenges reported to have delayed the IPO include a federal lawsuit filed by two students alleging that one of Laureate’s institutions, Walden University in the US, unnecessarily prolonged students’ study in order to garner greater tuition fees.

The company also came under scrutiny last summer when it was reported that it had paid $17.6m to Bill Clinton, who was its honorary chancellor from 2010 until soon before Hillary Clinton’s presidential bid announcement in 2015.

The company will trade under the name LAUR, and in a recent update to the SEC filing, Laureate revealed the sale would take place on the Nasdaq exchange.

The company aims to raise $100m in the IPO, according to the filing, though this figure is sometimes used as a placeholder and may be updated in future.

The company also raised around $398m through the sale of some of its European universities, the filing adds.

The company is selling stock to pay down some of its $4.3bn debt

Laureate was a publicly traded company between 1993 and 2007, when it was acquired by an investor group led by the company’s founder and CEO, Douglas Becker, and Citigroup Private Equity.

In a letter to prospective investors filed on the SEC’s website, Becker wrote: “We went private with the intention of accomplishing some very specific objectives and, having achieved these goals, we believe it is time for us to re-establish ourselves as a publicly traded company.

“Being public brings the highest level of transparency, and will enable us to more easily raise capital to support our mission which, at its core, is about expanding access to higher education through greater scale.”

In an effort to reassure investors who might be worried that some public companies are focused on short-term results, he stressed: “we hope that it is very clear to them that this is not our approach”.

“We want to best ensure that we always have capital to grow and bring the benefits of our education programs to more students.”

Underwriters for the offering include Credit Suisse, Morgan Stanley, Barclays, JPMorgan, BMO Capital Markets, Citigroup, KKR and Goldman Sachs.

Founded in 1989 as Sylvan Education Systems, Laureate teaches around a million students every year at more than 70 education institutions worldwide.

Institutions under the Laureate umbrella include the University of Technology and Management in India, Kendall College in the US and Mexico’s largest private university, Universidad del Valle de México.

It also has multiple partnerships for online course delivery, with institutions including the University of Roehampton in the UK.

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