Kroton Educacional SA, Brazil’s biggest for- profit college operator by market value, agreed to sell one of its universities for as much as 1.1 billion reais ($280 million) to comply with measures imposed by Brazil’s antitrust regulator.
Kroton agreed to sell Uniasselvi, located in the southern state of Santa Catarina, to Carlyle Group LP and Brazil-based Vinci Capital Gestora de Recursos Ltda., according to a statement from the U.S. private-equity firm. It marks the first investment by Carlyle in Brazil’s education sector after it bought stakes in a hospital-chain operator and a personal- assistance company in the past year.
"We’re looking for companies that are able to offer services that are still essential to Brazilians," Fernando Borges, the co-head of Carlyle in the country, said in the statement. "This is a good time to invest in an industry that still has good growth prospects."
The payment for Uniasselvi will be 400 million reais in cash when deal is closed, with another 450 million reais paid in five annual installments between 2018-2022, adjusted by inflation, according to a regulatory filing. Kroton will get up to an additional 255 million reais in annual payments if the unit meets financial and operational targets.
Kroton fell 1.4 percent to 10.04 reais at 2:13 p.m. in Sao Paulo, while the benchmark Ibovespa lost 0.5 percent. The college operator may use most of the proceedings from the sale to make acquisitions, according to a team of analysts at Banco Bradesco SA led by Luis Azevedo.
"The company has mapped 43 potential takeover targets to replace greenfield projects for campuses," Azevedo wrote in a note to clients. "The sale of Uniasselvi reinforces Kroton’s excellence in merger and acquisitions, as it acquired Uniasselvi for 510 million reais in mid-2012."
Brazil’s antitrust regulator said in May last year it would require Kroton to sell part of Grupo Uniasselvi and other assets when it approved Kroton’s purchase of Anhanguera Educacional Participacoes SA for 6.8 billion reais.