Abril Educacao Plans Organic Growth for 2014 After Buying Spree

Abril Educacao SA, the Brazilian education company that spent the most in acquisitions among its peers last year, will prioritize organic growth in 2014, said Chief Executive Officer Manoel Amorim.

The company could triple the number of its English-language schools and increase its market share of learning programs in private schools, where it has 18 percent, Amorim said in an interview in Sao Paulo. It also anticipates an increase in enrollment at technical schools thanks to a government incentive program.

Mergers and acquisitions in Brazil’s education sector represented the biggest deals in the world last year, five times the value of U.S. deals, and the trend is expected to continue, Amorim said in an interview. Brazil has about 2,000 independent school groups and many are seeking to consolidate.

“We made a lot of acquisitions over the past three years of businesses with high growth potential,” Amorim said. “Our focus in 2014 is to integrate these companies better.”

Abril, which started as a textbook publisher and now offers primary, secondary and pre-university courses, lost money in six of the last 11 quarters, according to data compiled by Bloomberg. The shares fell 17 percent in 2013, compared to a 70 percent increase for Kroton Educacional SA and a 29 percent increase for Anhanguera Educacional Participacoes SA. Kroton and Anhanguera announced a 5 billion reais ($2 billion) merger last year to create the biggest for-profit education company in the world by number of students.

Abril, which owns the English language school Wise Up and a 51 percent stake in Grupo Red Balloon, could triple the number of its English schools by opening more than 700 new locations. Red Balloon will double from 26 to more than 50 franchises this year, Amorim said.

“The possibilities for cross-fertilization among our businesses is very big,” Amorim said. About 550,000 students use the company’s learning systems.

Once opportunities for English language expansion have been tapped, Abril will focus on its operations abroad. It already has courses in Colombia, Argentina, the U.S. and China.

“Teaching English here is the same as teaching English in Colombia, Mexico, Argentina, Chile, Peru,” Amorim said. “It’s easily exportable.”

Amorim said he hasn’t fully discarded the possibility of making new acquisitions of English or job-preparation schools

“Obviously, if something marvelous comes up at an unrefusable price, we’ll have to stop and look at it,” Amorim said.

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