March 14, 2017 / 9:56 PM / 3 years ago

Brazil's Cruzeiro says IPO could fund education acquisitions

SAO PAULO, March 14 (Reuters) - Brazil’s Cruzeiro do Sul Educacional SA, the country’s sixth-biggest for-profit education firm, could opt for a public listing in order to fund growth and acquisitions, Planning Director Fábio Figueiredo told Reuters in an interview on Tuesday.

Potential acquisition targets include assets that rivals Kroton Educacional SA and Estacio Participações SA may be forced to sell in order to get antitrust approval for their merger, Figueiredo said.

He said Kroton and Estácio operations UniSEB, Uniderp and Unic would be particularly worth analyzing for acquisition. Brazilian antitrust agency Cade has until July to complete its investigation of the Kroton-Estácio tie-up.

Figueiredo’s comments show how consolidation in Brazil’s education sector may stretch on, even after the pending Kroton-Estácio deal to form the world’s largest for-profit education company, with 10 times as many students as its closest listed rival.

“An initial public offering would not be an end in itself, but a means to access capital to continue our expansion,” Figueiredo said, adding Cruzeiro “is a buyer.”

Cruzeiro sold a 37 percent stake to U.K.-based Actis LLP for $100 million in 2012, but is still majority owned by the two founding families that started the business half a century ago, Figueiredo said.

The company’s biggest acquisition to date, of São Paulo-based Unicid, came shortly after the Actis cash arrived.

Cruzeiro was responsible for four of 62 mergers and acquisitions in the education sector submitted to Cade between 2001 and 2015. Kroton’s takeover of Estácio, valued at about $1.73 billion, was announced in 2016 and is the largest to date.

On Friday, Actis will close the sale of its stake in Cruzeiro do Sul to Singapore’s sovereign wealth fund GIC, Figueiredo said, declining to reveal the value of the deal.

Brazilian newspaper Valor Economico reported in December that GIC would pay 500 million reais ($157 million) for 40 percent of Cruzeiro do Sul.

GIC’s São Paulo office declined to comment on the deal. ($1 = 3.18 reais) (Reporting by Ana Mano; Editing by James Dalgleish)

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