(Adds details on future acquisitions, comments throughout)
By Guillermo Parra-Bernal
NEW YORK, March 24 (Reuters) - Advent International Corp on Tuesday agreed to acquire for-profit Brazilian university Faculdade da Serra Gaúcha in a deal marking the return of the U.S. private-equity firm to Brazil’s education industry.
Advent is buying 100 percent of FSG, as the university is known, for an undisclosed amount to use it as a platform for future acquisitions, Newton Maia, an Advent director, said in an interview. The sector remains excessively fragmented and still presents fast growth opportunities for the years ahead, he said.
The acquisition is Advent’s first in Brazil’s education sector since its exit from Kroton Educacional SA in 2013. Kroton is now the world’s largest for-profit education company.
“There are three key drivers behind this deal: the ability to capture synergies, take advantage of massive market fragmentation and seize potential demand,” Maia said. “We believe FSG is a great platform to achieve all these goals.”
The deal comes as shares of Brazilian education companies slumped following a government decision to limit subsidies and student loan programs amid the widest budget deficit in more than a decade. Shares of Kroton shed 31 percent of their value so far this year.
Maia said FSG has been little affected by the reduction in such subsidies because they are used by less than a fifth of its more than 10,000 enrolled students. Future acquisitions will be aimed at education companies with at least 3,000 students enrolled, he said.
The deal is Advent’s first acquisition in Brazil this year.
According to Maia, the crisis that the industry seems to be going through is temporary and “the sector’s strong fundamentals remain intact.” Advent wants FSG to strike a balance between high-quality education, fast yet sustainable expansion and robust margins, he noted.
Advent did not hire a financial adviser for the transaction. FSG founders were advised by investment-banking boutique JK Capital.
The acquisition is subject to regulatory approval and other requirements. It is expected to be finalized by June. FSG is based in the city of Caxias do Sul, in the southern state of Rio Grande do Sul.
Editing by Diane Craft