Alex Barinka alexbarinka
October 2, 2015
Laureate Education Inc., the largest for-profit college network in the world, filed for an initial public offering, one of the first for a Public Benefit Corporation — a legally incorporated company committed to doing social good.
The company used a $100 million placeholder in a filing Friday with the U.S. Securities and Exchange Commission, an amount used to calculate registration fees that may change. In April, Laureate was interviewing banks for a $1 billion offering in the U.S. that would have valued the company at about $5 billion, people with knowledge of the matter said at the time.
The education company, which owns 88 educational institutions that are mostly located in emerging markets, reincorporated as a PBC, according to a separatestatement Friday. That means it’s legally beholden to benefiting the public — whether it’s the community, environment, employees or consumers — in a manner the company outlines in its certificate of incorporation.
Such a designation brings challenges as well as benefits. As a public company, Laureate would be accountable to public shareholders as well as to the public good.
Etsy Inc., which holds a non-legal designation of a Certified Benefit Corporation, is facing criticism from a tax-policy advocacy group after Bloomberg News reported on an Irish tax haven the company uses. The online retailer, which promised to set an example for its level of transparency, reorganized its Irish subsidiary in a way that conceals its tax-cutting arrangements from public view. The company’s shares have tumbled amid slow revenue growth.
“As a Public Benefit Corporation, Laureate is required to balance the financial interests of its stockholders with the best interests of those stakeholders materially affected by its conduct,” the company said in the statement. “Laureate’s public benefit is to produce a positive effect for society and students by offering diverse education programs both online and at campuses around the globe.”
Last month, crowdfunding platform Kickstarter reincorporated as Kickstarter PBC, while saying it would remain closely held. The company’s charter requires it to donate 5 percent of post-tax profit to arts education and organizations fighting inequality, and it also pledged not to use loopholes to reduce its tax burden.
Baltimore-based Laureate was taken private in a management-led $3.8 billion buyout in 2007, backed by an investor group including KKR & Co. and Citigroup Inc. Three years ago, the company pursued an IPO, people familiar said at the time, which never materialized.
Former President Bill Clinton, who served as honorary chancellor of Laureate from 2010 until April, left at around the time his wife Hillary Rodham Clinton, a Democratic presidential candidate, began questioning some practices of the for-profit higher education industry.
Credit Suisse Group AG, Morgan Stanley, Barclays Plc, JPMorgan Chase & Co., BMO Capital Markets, Citigroup, KKR and Goldman Sachs Group Inc. are managing Laureate’s offering.