Kroton studies the high school sector

Largest private higher education in the country, Kroton is analyzing the market of high schools for possible acquisitions. "We are studying, but we don't have a conclusion," said Rodrigo Galindo, President of Kroton, the value.
Kroton has only a school itself with the flag Pythagoras, in Belo Horizonte. It is a prestigious College, which caters from nursery to high school, aimed at upper-middle-class students. This unit serves as a "laboratory" for the company closely monitor how does basic education.
Kroton's connection with the basic education occurs through this school and the Pythagorean system of education-educational material distributed to 290 thousand students of 870 schools in the country. Last year, that business arm grew 20.5% and reached r $ 206,4 million. Represents approximately 5% of the total revenue of Kroton.
"We like this business [of Pythagoras] and, now, we're measuring rate of return of schools," says Galindo. The origin of Kroton in 1966 with the creation of cursinho Pythagoras for five young men, among them the former Minister Walfrido dos Mares Guia.
Studies on the College market are in an early stage and may or may not take Kroton to increase its presence in the high school sector. "We have to understand [first] where this market is growing," says Galindo. In higher education, he has special look to the North, Northeast and Midwest.
After the acquisition of Unopar in 2010, Kroton went on to focus their attention on higher education and the slice of basic education decreased from about 15% to 5% of its revenue. For the past five years, Kroton was often besieged to sell the Pythagoras, inclusive, by competitor April education that acts strongly in the segments of handouts and colleges.
This area is arousing attention of investors who believe that the next boom will come of basic education. The interest in high school schools is due to the higher average ticket. In 2013, according to data from Roper, consulting firm specializing in education, private schools have recorded revenues of about $ 40 billion, an increase of 25% compared to 2011.
Kroton is also open to acquisition opportunities in the higher education market. The assets of interest to Galindo, who has made 28 acquisitions throughout his career as Manager of education companies, are "strong brands that are located in the North, Northeast and Center-West".
"Make acquisitions this year is a possibility. We think that the consolidation will happen in the industry and is good to happen, "says Galindo. "The Consolidator tends to increase consolidated quality", explains the Executive, who last year received the green light from the Cade for the merger between Kroton and Anhanguera, creating the biggest educational group in the country. The Kroton carton should fatten up in the second half of the year with the sale of Uniasselvi, required by Cade to approve the merger. According to industry sources, is valued at about $ 1 billion.
This year, Kroton will invest r $ 400 million-value next to registered last year, but without considering possible purchases of companies.
With the shrinking of the Fies, Government-backed financing institutions that do not have neither sufficient box scale tend to become targets for buyers. "The market will still take a while to realize the opportunities," says Galindo.
Kroton itself has 55% of their students from classroom courses tied to contracts of Fies. The good news, says Galindo, is that 96% of them have already renewed their contracts so far. Freshmen who failed to Fies were absorbed by the monthly installment of Kroton--system created to take effect only in 2015. "We were able to capture 20 thousand new students with it," he says.
Galindo thinks there is room to improve the Fies. One idea would be to increase interest. "The rate of 3.4% per year is very low. Could be 6% to 6.5%, "he says. The Government could also open other options instead of contract finance 50% or 100% of the monthly fee as it is today. Who has more income, could be financed, for example, only 30% in Fies. "The Government can reduce the subsidy and have more students in Fies with the same budget," says Galindo, who does not work with the hypothesis of the Fies be reopened in the second half of this year. "But we are peaceful," he said. Kroton already corteou expenses in the first quarter in front of a backdrop of lower revenue. "We canceled hundreds of slots and off employees. The increased focus was cut slots and not people. " The year 2015, he says, "it's going to be good. Readequamos already the company. "