From GlobalHigherEd posted April 13, 2008 by  Susan Robertson:

Last week the recently launched Apollo Global Inc., a subsidiary of the Apollo Group and private equity firm The Carlyle Group (specializing in buyouts, venture and growth capital, leveraging finance around the globe), announced that it had agreed to acquire Universidad de Artes, Ciencas y Communication (UNIACC), an accredited, private arts and communications university in Chile, as well as it related entities.

This is the first ad/venture for Apollo Global Inc. since it was created in 2007 – to drive forward global investment in higher education in those countries are seen to have attractive demographics, good levels of economic growth and a regulatory environment that does not inhibit FDI in the education sector. The country region to be given to ‘thumbs up’ by Apollo Global Inc. is Chile.

According to Apollo Global Inc. Chairman, Greg Cappelli:

We have been working diligently to identify opportunities that will create value for Apollo shareholders, and we believe UNIACC, coupled with Chile’s table economic environment, strong student enrollment trends, and openness to foreign investment, is an excellent fit.

What makes Chile a particularly attractive country to invest in, according to Apollo Global Inc., is that growth in the private higher education sector outpaces that of the public sector. This view is shared by industry analysts (see, for example, the excellent Observatory for Higher Education’s report in 2007 on Latin America by Sylvie Didou Aupetit and Lisa Jokivirta), who argue that is the massive growth in student enrolments in higher education systems in Latin America that has promoted the surge in the number and diversification of foreign providers operating in the region since the early 1990s.

In the main, language has been regarded as the main barrier to widening out the range of players in the field, beyond those that reflected old colonial histories – Spain and Portugal. However, it is also evident that the strong commitment to the idea of education as a public good in many Latin American countries has created a less than welcoming environment for foreign investors – particularly for-profit firms.

However that said, the 2008 foreign education landscape in Latin America, and Apollo Global Inc. first venture into Chile suggests that there are significant changes taking place. A range of European universities (aside from Spain), including those from Germany (U of Heidelberg), Italy (U of Bologna), France, Belgium, Canada and the USA have all made major investments in the Latin American region.

On the for-profit front, Apollo Global’s first big investment takes it into a geo-economic and political sphere that has, so far, been dominated by Laureate Education Inc. (previously Sylvan Learning System). Laureate’s Latin American operations are located in Central and South America. It first entered the Latin American market when in 2000 it acquired both the Universidada de las Americas (UDLA) in Chile (established in 198 8) and one of Mexico’s largest and more prestigious universities founded in 1960, the Universidad del Valle de Mexico (UVM). Since then Laureate has rapidly advanced its commercial interests in Latin America, acquiring not only more universities in Chile, but developing a presence in a range of other Latin American countries, including in Ecuador (2000), Costa Rica (2003), Peru (2004), and Panama (2004), Honduras (2005) and Brazil (2005).

So why should Apollo Global Inc. acquire UNIACC? For one thing, it is one of the leading arts and communications universities in Latin America. It was also, in 2004, the first Chilean university to teach a fully on-line undergraduate program. Since then, new on-line programs have been added.

The value for Apollo Global Inc. in buying up UNIACC, is to not only to secure the ‘local brand value’ of UNIACC (and hence keeping off the agenda for Apollo Global charges of imperialism and neo-colonialism), but also because UNIACCs recent capability to deliver on-line programs, potentially positions Apollo Global Inc. as a supplier of cross border services within the region.

Let’s see whether Apollo Global also learnt a lesson from one of its parent companies, who were recently charged with aggressive recruiting practices in the US.

Susan Robertson