Kroton Agrees to sell Uniasselvi for $280mn

Brazilian firm Kroton Educational SA has decided to sell one of its universities for $280 million (Reais 1.1billion) to Carlyle Group LP and Brazil-based Vinci Capital Gestora de Recursos Ltda.

The decision of Kroton comes close on the heels of stringent measures being imposed by the Brazil's antitrust regulator.

Kroton is selling Uniasselvi and the payment of Reais 400 million in cash when the deal is closed. The remaining balance of Reais 450 million would be paid in five installments during the period of 2018-2022.

The college operator will utilize the sale proceeds for more acquisitions.

Kroton is the largest for-profit college operator by market value in Brazil. Kroton acquired Uniasselvi for Reais 510mn in mid-2012.

Carlyle Group LP is a US-based private-equity (PE) firm. It makes its first investment in Brazil's education sector by buying stakes in Uniasselvi, which is located in southern state of Santa Catarina.

Recently, Carlyle Group has acquired stakes in a hospital chain operator and a personal assistance company.

Fernando Borges, the co-head of Carlyle, said: "We're looking for companies that are able to offer services that are still essential to Brazilians. This is a good time to invest in an industry that still has good growth prospects."

Uniasselvi University has 75,000 students. However, there's no official confirmation yet on the transfer of university ownership to Carlyle Group and Vinci Partners.

A Brazilian newspaper has reported that so far no sale agreement on the university has been signed.

Kroton has earlier agreed with the antitrust regulator on divesting stakes in Uniasselvi and other assets. Brazil's antitrust regulator asked Kroton to offload part of Grupo Uniasselvi and other assets as a precondition to its acquisition of Anhanguera Educational Participacoes SA.

As part of the agreement, the payment of Reais 400 million will be in cash by the time of deal closure and another Reais 450 million to be paid in five installments from 2018 to 2022.

This payment is based on adjusted inflation.

Uniasselvi university is a major institution in distance learning education in Brazil. Education Investor reported in March that Uniasselvi was on the block and also said that Carlyle Group would be one of the potential buyers for the University.

If the unit achieves financial and operational targets, it'll fetch Kroton additional annual payments of Reais 255 million.

Meanwhile, Kroton shares in Sao Paulo fell over one percent. Kroton has drawn up a strategy on 43 takeover targets for replacing Greenfield projects for campuses.