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Estácio: Presentation - UniSEB´s Acquisition


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Estácio: Presentation - UniSEB´s Acquisition

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Estácio: Presentation - UniSEB´s Acquisition

  1. 1. UniSEB Acquisition September 2013
  2. 2. Disclaimer 2 The information contained in this material were prepared by Estacio Participacoes S.A. ("Estacio" or the "Company") merely for the purpose of presentation to investors and / or potential investors. The information herein were gathered in a substantial manner within the current outlook, based ongoing projections and the respective estimates. The use of terms such as "projects", "estimates", "anticipates", “forecasts", "plans", "expects", among others, aims to indicate potential trends that, evidently, involve risks and uncertainties, whose future results may differ from current expectations. Estácio cannot be held liable for operations or investment decisions taken based on such projections or estimates. The transaction described herein is pending analysis and approval by the Conselho Administrativo de Defesa Econômica (CADE), Brazil’s antitrust agency. The statements in this document related to the business outlook, forecasts of operating and financial results and growth prospects of Estácio and UniSEB, including the financial data and other estimates and evaluations represent the judgment of the Company’s management on the date hereof, with respect to the projections. These forward-looking statements depend substantially on obtaining the approvals and licenses required for projects, industry conditions and the performance of the Brazilian economy, the industry and international markets, and therefore are subject to change which are not controlled by the Company and, therefore, cannot be predicted. This performance report includes accounting and non-accounting data, such as pro-forma operating and financial data and forecasts that are based on the expectations of the Company’s Management, on the date hereof. The non-accounting figures were not reviewed by the independent auditors of the Companies.
  3. 3. Estácio’s last years... 2008 2009 2010 2011 2012 On-Campus Students 218 196 184 201 214 Distance Learning Students - 10 26 39 49 Net Revenue (R$ mn) 980 1,009 1,016 1,148 1,383 Net Revenue Growth 14% 3% 1% 13% 21% Market Cap (R$ mn) 915 1,846 2,137 1,457 3,422 Event Turnaround Turning Point Follow-On and New Academic Model GP Investments and Novo Mercado Distance Learning Launch Growth Consolidation 1H13 255 59 857 - 5,297 Note: Market cap for 1H13 considering the stock price as of September 11, 2013: R$17.95 Follow-On 3
  4. 4. Fonte: Estácio 4 Processes ...prepared us for a larger acquisition Estácio’s turnaround is the largest well succeeded integration case in the education sector EBITDA Margin +8.5 p.p. The turnaround brought organization, scale and operational efficiency gains Our decision to ‘fix the house’ created the foundations for the integration of a large acquisition Turnaround pillars
  5. 5. SEB Group Overview 5 Company’s History  Started its operations 50 years ago in Basic Education, with operations through brands such as COC, Pueri Domus, Dom Bosco, among others  Began its activities in Higher Education in 1999  Launched its Distance Learning in 2006  IPO in 2007 and Dom Bosco acquisition in 2008  Sale of its Education System to Pearson and delisting in 2010  Higher Education Portfolio: • 14 on-campus programs • 13 distance learning programs • 24 graduate programs, 36 grad/MBA programs in partnership with FGV and 85 extension courses (100% web based)  Quality Recognition:  OAB (Bar Association) seal for the Law program in 2010  UniSEB’s Distance Learning placed for two years in a row (2011 and 2012) in the top 10 of the country’s best programs, according to satisfaction survey conducted by ABED (Brazilian Distance Learning Association) Assets acquired in this transaction
  6. 6. Acquired Business Unit - UniSEB Total strategic alignment UniSEB Interativo  Offered by Centro Universitário UniSEB (IGC 4)  164 distance learning centers  30,000 undergraduate and 3,400 graduate students  DL centers with idle capacity (expectation to improve occupation rate)  Average ticket: R$184  Located in Ribeirão Preto, SP (IGC 4)  1 campus  2,300 undergraduate students  Excellent infrastructure  Premium average ticket: R$829 Distance Learning On-Campus Centro Universitário UniSEB UniSEB 6 Partnership with FGV  Partnership with FGV in graduate programs  2,100 graduate students  Double Certification in Business Administration program (undergraduate)
  7. 7. Investment Highlights Strategic Rationale 7 Strong presence in SP: Estácio’s definite entrance in São Paulo state. The deal marks the arrival of our Distance Learning to the country’s most important market Academic excellence: institution with a IGC grade of 4 and strong academic and technological know-how Complementary operations: On-Campus (Estácio) and Distance Learning (UniSEB) Quality on-campus operation: Centro Universitário in Ribeirão Preto (SP) with an excellent infrastructure and premium ticket Solid distance learning operation with 164 authorized DL centers and more than 33,000 students Entrance of shareholder with great knowledge of the Education sector
  8. 8. 8 Estácio’s Distance Learning Accelerated expansion when the sector regained its growth pace Student Base – DL (‘000) 2009: Estácio’s Distance Learning Launch Accessibility Distance Learning in Brazil Timeline – Student Base – DL (‘000)  52 active DL centers  59k students in 4 years  24 DL programs  3 programs recognized with “grade 4”  Other fifteen visits by MEC to DL programs: two “grades 5” and thirteen “grades 4” 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 – Future Beginning of DL in Brazil Accelerated Growth Regulatory Framework 42 50 60 115 207 369 728 838 930 2009 Lack of growth due to regulatory review 2005 - 20082002 - 2004 2009-2011 Increased supervision and compliance with new regulation 2012/2013 - Future Growth recovery 993 Lower Average Ticket R$200 - R$250 per month Extremely Convenient Suited for working adults Accessibility creates new demand for education Broader Reach DL model reaches new regions
  9. 9. 9 Estácio expands its Distance Learning… …and becomes strong in São Paulo *The distance learning centers are already operating DL graduate programs and prep courses. + 52 Estácio DL centers 164 authorized UniSEB DL centers 153 new DL centers (UniSEB expansion)* 369 DL centers 57 DLCs in the state of São Paulo SP state DL centers average size: Estácio: 1,130 students/center UniSEB: 300 students/center Opportunity to gain scale
  10. 10. Main Indicators for UniSEB 10 Estácio + UniSEB (2012 Pro-Forma) Distance Learning On-Campus 34.5 37.8 +9.6% +11.0% +35.5% (‘000) (R$ mn) (R$ mn) R$ million Estácio UniSEB Estácio +UniSEB Net Revenue 1,383 108 1,491 Gross Profit 506 50 556 Gross Margin 36.6% 46.7% 37.3% EBITDA 209 47 256 EBITDA Margin 15.2% 43.9% 17.2% Net Income 109 30 139 Net Margin 7.9% 27.9% 9.3%
  11. 11. Main Upsides Risks UniSEB offers several upside risks not yet priced in. Strength in SP: larger scale and preparation for entrance in the country’s most important state Higher celerity in regulatory processes: IGC 4 Capillarity for Corporate Education Experience in other Education segments 11 Synergies between Estácio’s campuses and UniSEB’s distance learning centers Filing for more than 150 new distance learning centers Distribution opportunities for distance learning graduate programs and short-term courses Know-how to format and sell Estácio’s Academic Model
  12. 12. Transaction Structure 12 Transaction Structure Shareholder Structure before the Acquisition Acquisition Price and Payment Conditions Valuation  UniSEB’s 2012 13.0x EV/EBITDA (adjusted)  2012 Estácio: 17.1x EV/EBITDA  R$615 million  50% in cash  50% in new shares to be issued  Purchase option of the assets not included in the transaction, which may be performed in 2015 (after the closing of 2014 results) Highly accretive acquisition GP Investments 12.3% Management, Board of Directors and Treasury 1.3% Free Float 86.4% 295,095,750 shares GP Investments 11.6% Management, Board of Directors and Treasury 1.7% Free Float 81.0% UniSEB Sellers 5.7% 312,948,877 shares Shareholder Structure after the Acquisition 17,853,127 new shares to be issued (reference price: average closing price of the 60-day period before the signing)
  13. 13. Next Steps 13 Estimated Timetable Audit Signing CADE’s approval ClosingESM Sep/13 Up to 330 days Final Due Diligence2 CADE’s approval3 Extraordinary Shareholders’ Meeting (ESM) to approve the deal4 Audit and Signing1 Closing (payment to sellers and beginning of integration)5 Final Due Diligence 1 2 3 4 5 30 days after CADE’s approval
  14. 14. Conference Call Details 14 Investor Relations: Flávia de Oliveira Email: Phone: +55 (21) 3311-9789 Fax: +55 (21) 3311-9722 Address: Av. Embaixador Abelardo Bueno. 199 – Office Park – 6th floor ZIP Code: 22.775-040 – Barra da Tijuca – Rio de Janeiro – RJ – Brazil Website: PORTUGUESE: Date: September 13, 2013 Time: 13h00 (Brasília) / 12h00 (US ET) Connection Dial-in Brazil: +55 (11) 3127-4971 / 3728-5971 Access Code: Estácio Webcast: Replay: disponível até 19/09 Access Dial-in Brazil: +55 (11) 3127-4999 Access Code: 40339160 ENGLISH: Date: September 13, 2013 Time: 14h00 (Brasília) / 13h00 (US ET) Connection Dial-in NY: +1 (412) 317-6776 Access Code: Estácio Webcast: Replay: disponível até 22/09 Access Dial-in Brazil: +1 (412) 317-0088 Access Code: 10033908