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Private equity firms looking to acquire universities

A number of universities are being lined up for private equity investments and even acquisitions, sector insiders have revealed. 
Speaking to EducationInvestor, Glynne Stanfield, partner at law firm Eversheds, said he was aware of five instances where “big private equity firms” are looking at buying part or even all of a UK university.
Stanfield, a leading sector lawyer who wrote the Universities UK guide to new structures in higher education, said he expected a number of deals to emerge in the next three to six months. Speaking in early September, he predicted that the first deal would conclude “in the next few weeks”.
While some investments may involve total acquisitions, Stanfield said, there would probably be more instances of private equity firms buying smaller stakes in universities.  
“It’s likely you’ll see a private equity firm buying part of a university so it can support the running of the university by injecting capital and offering management expertise,” he said.
Under its higher education white paper, the government plans to promote greater competition between all universities and private providers in England from next year. The white paper included measures intended to make it easier for universities to change their form and seek investment.
Stanfield said that some universities who have been hit by big cuts to central funding grants were now turning to new sources of capital in a bid to remain competitive. 
He argued that universities accepting private equity investment wouldn’t necessarily have to give up state grants, provided that the investor made a profit from operations that weren’t directly funded by public money. Sources of profit could therefore include a university’s research commercialisation projects, revenues from overseas campuses and from selling access to the institution’s degree awarding powers in the private sector, he said.    
Matthew Robb, senior principal at consultants The Parthenon Group, said he was also aware of five current instances where private equity firms were looking to invest in universities. 
He noted that there are “legally acceptable routes by which universities and investors can enter into partnerships that retain the best of both worlds”.
You can read more on this story in the October issue of EducationInvestor, published next week

Posted on: 22/09/2011

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