Essential reading for education companies worldwide
Remember me:
Skip Navigation LinksEI article
Brazil’s burgeoning private K12 market

Brazil is among the most active emerging markets for investment in education and its private K12 market offers particularly promising conditions, according to a new study by L.E.K Consulting. Danish FaruquiJitin Sethi, Giacomo Rotigliano and Priyanka Thapar, of L.E.K. Consulting’s global education practice, outline the key findings

In early 2018, Brazil’s largest for-profit education company, Kroton Educacional, acquired Somos Educação for $1.8 billion. This is the latest in a string of high-profile investments in Brazil’s private education sector. Consistent investment activity confirms a growing shift towards private sector provision, making Brazil among the most active education investment landscapes in emerging markets. This trend has been observed across most education verticals, including the K12 segment. In Brazil, a combination of the following characteristics have led to optimal conditions for investment in private K12:
  1. Poor-quality public provision: Brazil’s public schools are over-burdened and characterised by high student-teacher ratios and low learning outcomes. The state of public education has driven demand for private provision, which delivers higher quality outcomes, according to recent research (see Figure 1).
  2. Rising affordability: in the last two decades, Brazil’s middle class has grown from 15% of the population to over 30% in 2018(1). Increasing affordability, paired with a higher demand for features such as English language training and more a modern curriculum, has fuelled demand for private schools. 
  3. Favourable regulatory environment: Brazil’s government recognises and supports the growing role of the private sector in serving the population’s needs. This is evident in the favourable regulatory environment for private education institutions. In K12, for-profit ventures are allowed and there are no explicit restrictions on fee growth. In Brazil, private education accounts for less than 20% of K12 enrolments, whereas in India it accounts for close to 30%. L.E.K.’s global education practice believes that this shift to private provision will continue in Brazil, given the scale demonstrated in other emerging markets. 

As the Brazil K12 market continues to develop, what are some key themes that investors should be aware of?

Key themes

1.Increasing desire for ELT and a bilingual curriculum
There has been a steep rise in demand for high-quality English training in schools. As a result, bilingual schools have emerged as the fastest growing segment in the market. Providers such as Maple Bear have demonstrated consistent growth by offering an affordable alternative to international education: a bilingual curriculum. However, in order to provide a high-quality bilingual education, schools must supply qualified bilingual teachers. This is challenging given the limited availability of local bilingual teachers and the high cost of expat teachers. Providers must overcome this through better teacher training and recruitment practices.

2. Focus on improved student outcomes
Schools that focus on providing quality outcomes have witnessed strong growth despite a challenging economic environment. There are multiple schools of this nature that maintained enrolment growth rates of roughly 10% between 2014 and 2017, despite an economic slowdown. These schools concentrate their efforts on preparing students for admission to good universities and are perceived as superior to other schools by parents(2). For investors seeking to make acquisitions in Brazil’s K12 market, school brands with outstanding outcomes are effectively differentiated. 

3. Personalised learning 
Personalised learning has historically been limited to premium schools that have smaller class sizes and relatively well-paid teachers. In budget schools, student-teacher ratios are nearly two times that of premium schools. However, with the emergence of technology in education, the market is poised to bring personalised education to scale. Sistemas (school systems), such as UNO, have already pioneered technology-enabled tools that help teachers track student performance and provide real-time feedback. One commonly cited roadblock is that Brazil’s infrastructure and teacher ICT training in most schools is inadequate. L.E.K. Consulting believes that this can be addressed by platforms that bridge the gap between the classroom and the tools that are available. Numerous edtech companies in Asia have been able to overcome similar infrastructure gaps by adopting a B2C model. These providers offer online learning modules (i.e. tutoring) for K12 students and have been able to achieve rapid growth.

If schools are able to provide these features, parents will be willing to pay more for them. We anticipate that this will lead to ‘premiumisation’ in the market, with the emergence of higher-end schools. Investors who wish to capitalise on this opportunity should be aware of the key challenges that the market presents, and the potential solutions.


1. Limited scale assets for acquisition
There are few scale assets that are suitable for acquisition. The market is currently dominated by ‘mom-and-pop’ operations; less than 5% of enrolments fall under the organised sector. Small standalone providers account for the remaining provision, so the process of consolidation will be slower and more challenging. L.E.K. Consulting advises that investors follow a structured criteria to select suitable assets, analysing factors such as location, quality, scale and opportunity for fee growth (see Figure 2). In a recent study of the top 20 cities in Brazil, L.E.K. found some 100 potentially acquirable targets after adjusting for ownership, scale, and quality.

2. EBIDTA margins and valuation considerations
EBITDA margins in private K12 are limited by relatively low scale and tuition fees. In fact, the average enrolment scale of a private school in Brazil (about 250) is lower than that of other countries such as China (about 425) and the UK (about 325) (see Figure 3). Investors need to carefully align their EBITDA value expectations as they consider strategies for consolidating the market.

3. Diverse regional needs 
Brazil has a diverse range of regional education needs. This is partially a relic of the differing entrance exams that large regional universities used in the past, which schools shaped their curricula around. Over time, this led to a diverse educational landscape across the country.

Although universities increasingly use a standardised national entrance exam, there is still a legacy of differentiation that means new operators may find it challenging to serve this range of needs with standardised offerings.

Investors and operators can overcome these challenges with sound strategic planning and a rigorous analysis of Brazil’s K12 landscape.

Some alternative models they may consider include:
  • Local partnerships: franchising an existing global school brand is an effective way to ensure wider reach while lowering cost by outsourcing operations to local partners. This model also leverages the brand value of established schools. 
  • Technology-enabled services: developing a technology-enabled school platform in order to reach a wider set of students across multiple schools. Sistemas have been able to leverage technology to provide educational services, such as learning management systems for teachers, to provide a personalised learning experience to many students. 

Brazil’s private K12 market is a hotbed of opportunities for investors and operators. Mounting demand for higher quality education, combined with a wealthier population and supportive government regulations have created optimal conditions for market entry. A greater focus on bilingual education, high outcomes, and personalised learning are among the emerging themes that investors should keep in mind. However, success will be determined by how well investors can identify the gaps in the market in order to meet local needs. Those that are able to gain in-depth insight into Brazil’s K12 education landscape will be well-placed to seize one of Latin America’s largest education opportunities.

(1.) World Bank report
(2.) Parent surveys conducted by L.E.K. Consulting

This article is adapted from an upcoming report, ‘Brazil’s Burgeoning Private K-12 Market’, which will be available at Report authors include Danish Faruqui, Jitin Sethi, Giacomo Rotigliano and Priyanka Thapar.

L.E.K. Consulting is a global management consulting firm that uses deep industry expertise and rigorous analysis to help business leaders achieve practical results with real impact. The L.E.K. global education practice is a specialist international team of 60 consultants and five partners and principals who have completed more than 600 education sector engagements across more than 90 countries, serving CXOs and boards of some of the world’s largest education businesses. Our experts bring insights on education businesses, investment opportunities, market dynamics, and impact across segments from K-12 to ed tech. The global education practice leaders have advised on the majority of global education sector deals over $200 million since 2010. For feedback or comment on ‘Brazil’s Burgeoning Private K-12 Market’, contact

Posted on: 06/11/2018

Latest news

TAL Education Group, the Beijing-based after-school tuition provider, today reported net income of $364.5 million for the fiscal year ending 28 February 2019.
Legacy Education Alliance, an educational training seminars, conferences and services company, has reported a $10 million net loss for 2018.
Paris-based workforce engagement platform 360Learning has raised €36.5 million in a Series B funding round.
Student loans servicing and collecting company Navient has announced a first quarter 2019 core earnings net income of $136 million.
Beijing-based education services provider Gaosi Education Group has raised $140 million in a fundraising round, led by private equity investor Warburg Pincus.
Concordia University in Montreal has received its largest gift ever – a C$30 million donation from an anonymous donor.
K12 Inc, an education company that sells online schooling and curricula for pre-K through to high school students has reported net income of $18.5 million for the third quarter.
Mumbai-based education services company MT Educare is to move its online education app Robomate into a separate entity.
Modo Labs, a Cambridge, Massachsetts-based mobile app development platform with clients in higher education, has purchased campus e-commerce transactions company Ulyngo.
Gurugram-based ed tech start-up DoubtNut has secured $3.3 million in a round led by Surge, the start-up accelerator and incubator platform of venture capital firm Sequoia Capital.

Middle East | Dubai SEN regulations

Consultant Beatrice Cernuta spent four years launching special needs settings in Dubai before returning to EY-Parthenon. She speaks with Josh O'Neill about how the emirate’s private schools should approach new regulations requiring them to cater to special needs students by 2020

my images

Europe | UK early years

A co-founder of Nord Anglia plans to rapidly scale his UK-based early years business Just Childcare, but he won't be casting a net into international waters anytime soon, he tells Josh O'Neill