Laureate International Universities

Corporate history[edit] The Sylvan/Laureate Foundation was created in 1997 as a non-profit foundation to provide education, training and community support.[22] Laureate Education was founded as a company by Douglas L. Becker. It was originally created by Sylvan Learning Systems in 1998 as an operational division to focus on post-secondary institutions and called Sylvan International Universities. When the division was created, Sylvan was a public company primarily focused on educational services for students in primary and secondary education through company owned and franchise locations.[23] The company's first investment was Spain's Universidad Europea de Madrid in 1999, quickly followed by investments in post-secondary institutions in Mexico's Universidad del Valle de México, Chile's Universidad de las Américas and Switzerland's Les Roches International School of Hotel Management and its first investment in online higher education, Walden University in the United States.[24] The Universidad Europea de Madrid purchase was for $51 million.[25] In March 2003, Sylvan Learning Systems decided to focus exclusively on post-secondary education.[26] The company sold the K-12 business units and the Sylvan name and trademark, to a new company, Educate, Inc., formed by Apollo Management. In 2004, Sylvan changed its name to Laureate Education, Inc, to reflect the change in focus.[27] In 2007, the company was acquired by an investor group led by Douglas Becker and Citigroup Private Equity.[28][29] Between 2007 and 2015, Laureate made 41 acquisitions with a total purchase price of about $2.0 billion.[30] According to Laureate, a key to the company's growth was its expansion into Brazil, where Laureate owned 13 institutions with a total enrollment of about 281,000 students.[30] In 2008 Universidad Tecnológica de México (UNITEC) was bought by Laureate Education, Inc. The campuses in Guadalajara and Monterrey became UVM campuses. By 2010, the company owned more than 50 institutions, both campus-based and online, in 21 countries, with a total enrollment of about 550,000 students.[31] In 2010, former U.S. President Bill Clinton became the "honorary chancellor" of the network.[32] His compensation was undisclosed at the time, but subsequent reports indicate he has earned around $16.5 million from the company.[citation needed] In January 2013, the International Finance Corporation, a member of the World Bank Group, made a $150 million equity investment in Laureate to expand access to quality higher education in emerging markets.[33][34] Laureate also bought Brazilian for-profit university chain (Centro Universitário das Faculdades Metropolitanas Unidas (FMU) for $412 million. The chain was bought in anticipation of a growing middle-class in Brazil.[35] Coursera, a provider of massive online open courses, announced in July 2013 that it raised $43 million in investments from a group that included Laureate Education, Inc., the World Bank's investment arm, LearnCapital Venture Partners, GSV Capital and venture capitalist Yuri Milner.[36] Arizona-based Thunderbird School of Global Management announced a partnership with Laureate in March 2013 to set up a joint venture that would provide capital support to Thunderbird to open multiple international instruction sites and expand its executive education and online programs.[37] Four Thunderbird Board members resigned in protest.[38]In December 2013, Laureate announced that its shareholders elected three independent directors: Robert B. Zoellick, former World Bank president;[39] Judith Rodin, president of the Rockefeller Foundation;[40] and George Muñoz, principal of the Muñoz Investment Banking Group.[41] In 2015, Ernesto Zedillo, the former president of Mexico, was named a Presidential Counselor by Laureate.[42] Debt and Downsizing[edit] In 2014, the Washington Post reported that "Laureate is backed by several of the biggest names in finance, including Henry Kravis, George Soros, Steve Cohen and Paul Allen".[43] Laureate's annual revenue was approximately $4 billion.[43] The company held $3.5 billion [44] to $4.7 billion in debt.[29] Moody's rated Laureate's corporate bonds as high-risk and characterized Laureate as highly leveraged.[45] Laureate spent in excess of $200 million per year on advertising, including television commercials, online campaigns and billboards. There were claims that "Laureate boosts revenue at struggling colleges by turbocharging enrollment, often without a parallel increase in academic investment."[43] In 2016, Laureate sold its two Glion Institute of Higher Education campuses, four campuses of Les Roches International School of Hotel Management,[46] and five LIUF schools.[47] The total value of the Glion and Les Roches to Eurazeo was CHF 380 million.[46] Laureate Education had an initial public offering on the NASDAQ on February 1, 2017, its share closed the first day down from its opening offering price.[48] The IPO stated that Laureate had grown to more than 1 million students and 200+ campuses in 28 countries, and the IPO was in part a response to a global demand for more higher education among a rapidly growing middle class.[30] They were only the third B Corp to go public, the first two being Etsy and Rally Software.[49] According to Inside Higher Education, Laureate had about $3.2 billion of long-term debt in September 2017. In September 2017, founder Doug Becker announced his resignation as Laureate's CEO effective January 2018.[50] In 2018, the US Department of Justice dropped charges related to the U.S. Foreign Corrupt Practices Act for an alleged bribe in Turkey.[51][52] Laureate closed or sold several schools, including Santa Fe University of Art and Design, Kendall College,Centro Universitário do Norte (UniNorte),[53] University of St. Augustine,[54] Universidad Europea de Madrid, Universidad Europea de Valencia, Universidad Europea de Canarias, Universidade Europeia in Portugal and Instituto Português de Administração de Marketing in Portugal.[55] Laureate also reportedly sold Université Internationale de Casablanca, and schools in China, Malaysia, Italy and Cyprus.[56] Laureate also stopped enrolling new students at the University of Liverpool and the University of Roehampton.[57] In December 2018 Becker announced he was stepping down as the Board Chair.[58] [59] Laureate provided the US Department of Education with letters of credit totaling $137 million for Walden University, NewSchool of Architecture and Design, University of St. Augustine for Health Sciences and Kendall College. The LOCs were meant to safeguard federal student aid if the schools closed. [60] In March 2019, Laureate sold Istanbul Bilgi University to Ilbak Holding,which has ties to the AKP. [61] On March 31, 2019, Laureate had $2,136,328 in long-tern debt. The company added that "we have not yet completed the divestitures of our subsidiaries in Central America, Spain, Portugal, Turkey, India and Malaysia, as well as one small campus-based institution in the United States."[62] In June 2019, the private equity firm KKR planned to sell 10 million shares of Laureate through Wengen Alberta. [63] Wengen is a limited partnership which includes subsidiaries of KKR, Citigroup, and Steven A. Cohen's SAC. [64] Laureate COO, and CEO of the Brazil network, Ricardo Berckemeyer resigned effective July 2019. [65] Despite increased enrollment, revenues were down 10 percent in Brazil after student aid funding was cut.[66] Additional downsizing is being planned in Mexico [67] and Turkey, and the contract for operating the eight schools in Saudi Arabia expired in 2019. [68] Long-term and short-term debt[edit] Laureate reduced its long-term and short-term debt from 2015 to 2018. Moody's rates Laureate's bonds as B1.[69] Long-term debt (in thousands) 4,338,260 (2015) 3,637,125 (2016) 2,982,786 (2017) 2,486,984 (2018) 2,136,328 (March 2019) Short-term debt (in thousands) 193,042 (2015) 184,207 (2016) 122,049 (2017) 95,481 (2018) 198,076 (March 2019) Controversies[edit] Laureate has had schools in Turkey and Chile, even though for-profit schools are banned.[43] In Brazil, the Rio State Legislature's Investigative Commission on Private Universities issued a report criticizing for-profit colleges like Laureate for firing professors.[43] In December 2018, 150 teachers were dismissed from the Laureate Brazil network. A dozen teachers accused Laureate of corruption ranging from forged documents to using teachers in classes they were not trained for. [70] Relationship with Bill Clinton[edit] Though former United States President Bill Clinton's role as a chancellor of Laureate was officially described as "honorary", from 2010 until early 2015, Bill Clinton was paid just short of $16.5 million for his role as honorary chancellor, including $2.5 million in 2011, when Hillary Clinton was still Secretary of State. These numbers were disclosed in his publicly released tax returns.[71][72][73] Students from many of the network institutions participated in the Clinton Global Initiative University, including students from Universidade Anhembi Morumbi, Universidade Potiguar, INTI International College, INTI International University, Universidad del Valle de México, Universidad Peruana de Ciencias Aplicadas, Universidad Europea de Madrid, Istanbul Bilgi University, Stamford International University, Walden University, Université Internationale de Casablanca, National Hispanic University, and Universidade Salvador.[74][75] Clinton appeared at the Laureate Summit on Youth & Jobs at Universidad Europea de Madrid in 2013,[76] Universidad Peruana de Ciencias Aplicadas in 2013,[77] Université Internationale de Casablanca in 2013,[78] European University Cyprus in 2012,[79] Universidad del Valle de México in 2012,[80] Walden University's 2011 commencement ceremony,[81] Istanbul Bilgi University in 2010[82] and INTI International University in 2010.[83] In April 2015, Clinton ended his ties with Laureate, shortly after Hillary Clinton announced her second presidential campaign.[84]