Carlyle’s Mexico fund sells portfolio company to Carlyle joint venture

For-profit education investor Apollo Global, 20 percent of which is owned by Carlyle, has purchased from Carlyle Mexico Partners 65 percent of a Mexican university valued at $47m.

Apollo Global, a company partially owned by The Carlyle Group’s third venture fund, has purchased a 65 percent stake in Carlyle Mexico Partners-owned Universidad Latinoamericana on an implied enterprise value of $47 million (€30.3 million).

Carlyle Mexico Partners, a $134 million private equity fund managed by The Carlyle Group, will retain 35 percent ownership of the Mexican university.

Carlyle initially acquired a majority stake in Universidad Latinoamericana in 2005 from five family owned businesses for an undisclosed amount.

Lack of capacity in public Mexican universities creates a high demand in the country for private education, according to Carlyle Mexico Partners managing director Joaquín Avila.

“[Universidad Latinoamericana] was very profitable but nevertheless was not necessarily managed according to current market condition needs,” Avila said. Carlyle was able to build a platform for the university’s future growth.

Apollo Global was created in October 2007 and is 80.1 percent owned by for-profit education company Apollo Group, with the remaining 19.9 percent owned by Carlyle’s $605 million Carlyle Venture Partners III fund.

The joint venture was formed with the intention of making a range of investments in the international education sector. Apollo Group is one of the world’s largest for-profit education operators, mainly operating in North America. Carlyle’s education-related investments have been largely outside North America.

“We thought the combination of one plus one was going to give us more than two,” said Avila of partnering with Apollo Global. Carlyle brings acquisition skills for purchasing new campuses and institutions while Apollo brings expertise on adult education including online and continuing education programs, he said.

“The core of their business is educating people, the core of our business is buying companies,” said Avila.

Earlier this year, Apollo Global acquired Universidad de Artes, Ciencias, y Comunicación in Chile for $40 million in cash and assumed debt, plus an earn-out based on a multiple of earnings paid in four years which, paid today, would be worth approximately $9 million.

Carlyle entered Latin America with the establishment of Carlyle Mexico Partners in 2004 and closed the fund on $134 million in March 2007. The fund invests in private and publicly owned high growth businesses, restructurings and NAFTA companies in Mexico.

In September 2007, the fund invested in Arabela Holding, a Mexican direct seller of novelty, personal care and home goods. Carlyle Mexico Partners also invested in outsourced contact center company Hispanic Teleservices Corporation, based in Texas. Hispanic Teleservices has since been sold to publicly-listed French company Teleperformance.