Business Case

Kroton Educacional SA – A Private Equity Operation Can Hide Another One

Business case prepared by Cyril Demaria & Rafael Sasso, January 2013.1

It is a busy morning in Sao Paulo, this 24th of June 2009. Advent International has just announced its investment in one of the major listed educational companies: Kroton Educacional SA. The press headlines reflect the stock exchange’s reaction: a bold move, which can pay off tremendously but has high stakes.

The market sentiment is that the Brazilian education market is on the verge of major shifts. It has been growing at a fast pace, propelled by the economic growth and the need for highly skilled workers. Private companies have thrived in this context. Some of them are now listed and the market is evolving fast, notably towards distance/e-learning. At the same time, competition is intensifying.

While Kroton Educacional SA is a very promising investment, stock prices of listed educational companies are languishing against the main index of the Brazilian stock exchange (BM&F Bovespa). Advent has now to prompt change in its new portfolio company, and there is more than one investment thesis at stake in private equity investing. Which of his options would be the best to transform Kroton into the Brazilian market leader?


The Brazilian private education market really took off in 1997–1999. A regulation change paved the way for the development of private for-profit educational institutions. Following ...

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