24398 - Fundo de Educacao para o Brasil

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Summary of Proposed Investment

Project Number

24398

Company Name

Fundo de Educacao Para A O Brasil Fundo de Investimento

Date SPI Disclosed

Dec 21, 2005

Country

Brazil

Industry

Health, Education and Life Sciences

Projected Board Date

Jan 23, 2006

Status

Completed

Sector

Colleges, Universities, and Professional Schools

Department

Regional Industry MAS LAC & EUR

Environmental Category

B - Limited

Previous Events

Approved : May 11, 2006
Signed : May 25, 2006
Invested : Jun 13, 2006

Project Description

The Fundo de Educação para o Brasil (the Fund or FEBR) was structured by Banco Patria, one of Brazil’s leading private equity firms, as an investment vehicle focused on the post-secondary education segment in Brazil. FEBR has one single asset, a controlling stake in Anhanguera Educacional S.A. (AES). The Fund will channel its investments in the sector through AES.

AES is a private, for profit, São Paulo based, post-secondary education company with 10 campuses and average enrollment of 16,800 students in 2005. AES focuses on offering good quality, affordable education to lower-income students in Brazil.

IFC’s investment of up to $16 million will be used to fund part of AES’ expansion strategy, centered on building new campuses in small to medium sized cities in the state of São Paulo and other regions in the Brazilian Southeast – the country’s most prosperous – over a 3 year implementation period.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	12.0
Equity

Development Impact

The project will have a strong development impact in increasing access to post-secondary education, particularly for lower-income students who have limited access to other private or public institutions in Brazil. There is still demand for places in private post secondary education institutions today, with an average of 2.5 applications per place in state institutions and around 1.5 applicants per place in private institutions.
Brazil has one of the world''s largest budgets per student in public higher education institutions. In 2000, Brazil spent around $13,600 per student, second only to the USA ($19,200 per student) and by far the highest of any developing country. There are two issues worth noting:

- the system caters mainly to the elite; and
- even after such high education expenditures per student, education outcomes are highly variable.

Private institutions are starting to ''raise the bar'' in terms of quality, and AES continues to be highly rated, even as it grows quickly, by the Ministry of Education. It accomplishes this with one of the most efficient delivery models in Brazil.
IFC value added to FEBR and AES include the following:

- well-positioned to bring best practices in the sector to the company;
- insert AES into a network of international higher education institutions;
- leverage sector experience to assist in evaluation of future expansion opportunities;
- provide measure of political cover and enhance sponsor group credibility vis-à-vis Ministry of Education and other government authorities;
- source of long term financing (FEBR can only take on debt from BNDES and multilateral institutions);
- enhance AES’s credibility with other higher education institutions, potentially facilitating a sale or listing of the company in the future.

This is a Category B project according to IFC’s Procedure for Environmental and Social Review of Projects because a limited number of specific environmental and social impacts may result which can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria. The review of this project consisted of appraising technical and environmental / social information submitted by the project sponsor. Issues to be addressed include minor fire and life safety provisions for school buildings.
Location of environmental documents In locally affected community
Environmental documentation will be made available at the following location:

Anhanguera Educacional S.A.
Al. Maria Tereza no. 2000
Dois Corregos, Valinhos

Contacts

For Inquiries About the Project, Contact

Alexandre Texeira de Assumpção Saigh, Director
Banco Patria
Av. Brig. Faria Lima, 2055 – 7o andar
01452 001 – São Paulo – Brazil

This Summary of Project Information (SPI) is prepared and distributed to the public in advance of the IFC Board of Directors' consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC's activities, and this document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only. The following SPI is disclosed in accordance with IFC's Disclosure of Information Policy that went into effect September 1998.

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