Laureate International pulls out of its five universities
Laureate International’s exit has caused political ripples in Chile because of its importance in higher education. Laureate-controlled institutions – the universities Universidad Andrés Bello (UNAB), Universidad de Las Américas (UDLA) and Universidad Viña del Mar (UVM), and the professional institutes AIEP and Escuela Moderna de Música y Danza – catered, in all, for over 173,000 students, that is, 14% of all the higher education students in Chile.
The three largest institutions that were owned by Laureate are UNAB, with 49,000 students, the professional institute AIEP with 91,000 students and UDLA, with 23,000 students.
Laureate International sold the professional institute AIEP to UNAB for US$214.6 million, and the professional institute Escuela Moderna de Música y Danza to the Fundación Educación y Cultura for US$3.6 million.
“The change of holder does not involve any change in the current conditions of our students, collaborators or academics. It is very important to make this clear,” declared Julio Castro, UNAB’s rector, in an interview with El Mercurio on 19 September.
It has purchased AIEP, said UNAB’s head, in order to reinforce the university’s hallmark as an inclusive institution and to strengthen the link between its careers and programmes and the technical-professional sector.
For their part, AIEP authorities have emphasised that having been purchased by UNAB does not imply structural changes: “We will remain as we have operated until now, that is to say, as an independent and autonomous entity. All our plans and projects remain as they had been planned.”
Leaders of the five now ex-Laureate institutions declared these had been strengthened during the period they were linked to the educational holding and all agreed that Laureate’s departure marked the start of a new phase, now with a non-profit, Chilean holder.
Pilar Romaguera, UDLA’s rector, said: “We are certain that this announcement is the beginning of a new phase in which we will be strengthened as an institution and as a university community.”
In a public statement, the Fundación Educación y Cultura declared it good news for students, teachers and administrative personnel that a non-profit Chilean entity was becoming the holder of these higher education institutions, as “the establishment of a non-profit foundation allows and ensures strict compliance with the existing legislation, in letter and spirit, and assures that all the profits and capital of these institutions will be devoted exclusively to fulfilling their purposes: being a contribution to Chile through the development and betterment of higher education”.
Jorge Selume, the foundation’s president, maintained that “we are committed, with each academic community and their students, in the consolidation and continued improvement of each of their educational projects. UNAB, UDLA, UVM and the Escuela Moderna de Música y Danza are very different institutions, with different educational purposes, but all with the same principles and values”.
The lawfulness of the transfers of the Laureate group’s institutions is being examined by the Chamber of Deputies’ Education Commission. Juan Santana, the commission’s president, justified the enquiry because of “the damage to Chile’s higher education done by entrepreneurs that see in it a business prospect”.
Local and global factors
Laureate started planning its exit from Chile over a year ago, propelled by both local and global factors.
In Chile, it was criticised for its for-profit business model through which its institutions paid licences for intellectual property rights and for services.
Furthermore, last August it announced a US$419 million devaluation of its Chilean assets, which it attributed to the “challenging political and regulatory environment” and the uncertainty of the constitutional debate. Chile is holding a referendum on 25 October on whether or not to reform its 1980 Constitution, passed under the Pinochet dictatorship.
Eilif Serck-Hanssen, Laureate’s president and executive director, expressed the company’s concerns about “the challenging political and regulatory environment we have encountered, and of course the possibility that a new Chilean constitution comes into force in the summer of 2022”.
Internationally, Laureate’s exit from Chile is part of its plans to explore strategic alternatives for each of its businesses to unlock shareholder value. Goldman Sachs has been assisting them in this process. The company said in a press release it would evaluate all potential options for its businesses, including sales, spin-offs or business combinations.
Laureate has reportedly already started exploring the sales of its Peru, Mexico and Australia-New Zealand businesses.