Laureate Education IPO Gets An ‘F’

Laureate Education IPO Gets An ‘F’
Jan. 31, 2017 2:10 PM ET

Nicholas Durante


Laureate Education is set for an IPO which can raise them over $550 million. The company faces high debt in a tough industry. Suffocating debt combined with signs of declining revenue are reasons to skip this IPO. I wrote an article back in October of 2015 about the Laureate Education (NASDAQ:LAUR) IPO here. While I was bearish on the company when I wrote that article not much has changed. However, since the IPO is only a couple days away I thought I would take the time to reiterate my concerns.

They Are Leveraged

Laureate Education is swimming in nearly $4 billion in long-term debt, which can present a problem operating in the for-profit education industry. On the short-term horizon, they have enough cash to get around but don’t currently have comfortable liquidity. They have a cash ratio of 0.25 but a current ratio of 0.78. This shows that the IPO proceeds are going to be important for Laureate Education. Their cash Continue reading


IPO Preview: Laureate Education Is Not An Educated Buy

IPO Preview: Laureate Education Is Not An Educated Buy
Jan. 31, 2017 9:21 AM ET
Don Dion


LAUR filed an S-1/A with the SEC for its upcoming IPO, intending to sell 29 million shares at a marketed price range of $17 to $20.

LAUR has an additional 4.35 million shares as an over-allotment option for its underwriters.

Despite impressive revenue figures and a strong recent swing to profitability, LAUR’s IPO process has revealed some problems.

LAUR has a debt of more than $4 billion, and its former chief accounting officer filed a whistleblower complaint against the company.

We are hearing the deal is covered with some price sensitivity at the low-end of the range. We recommend that investors pass on this IPO.


Laureate Education, Inc. (NASDAQ:LAUR) filed an S-1/A with the Securities and Exchange Commission, signaling that the company is ready to move forward with its initial public offering. The company plans to sell 29 million shares at a marketed price range of $17 to $20. This means that the company is looking to raise just over $500 million in its IPO. It has an additional 4.35 million shares as an over-allotment option for its underwriters.

The joint book-running managers for the IPO are Credit Suisse, Morgan Stanley, Barclays, Macquarie Capital, J.P. Morgan, BMO Capital Markets, Citigroup and Goldman Sachs & Co. The co-managers for the IPO are, Baird, Barrington Research, Piper Jaffray, Stifel, William Blair, Bradesco BBI and BTG Pactual.

Business overview

Laureate Education, Inc. is a for-profit higher education company that operates universities in 25 countries around the world. It previously was a public company from 1993 to 2007 before being taken private. The company states that it is the largest company that offers higher education. It has more than 1 million students enrolled in its network of 71 universities.

Executive management overview

The chief executive officer and chairman of Laureate Education, Inc., Douglas L. Becker has served in those roles since Feb. 2000. He also served as the company’s president from June 2011 until Sept. 2015. From April 1994 until Feb. 2000, Becker was the co-chief executive officer and president of Laureate Education, and he has been a director since Dec. 1989.

Enderson Guimarães has served as the president and chief operating officer of Laureate since Sept. 2015. Prior to that, he served in multiple executive-level roles at PepsiCo Inc., including as the chief executive officer of PepsiCo Europe from Sept. 2012 to Sept. 2015. Before that, he was the chief executive officer of the major appliances division of Electrolux from 2008 to 2011. Before that, Guimarães spent 10 years working in a variety of capacities at Philips Electronics, leaving as a senior vice president. Guimarães has a Master of Business Administration from McGill University and a Bachelor of Science from the Aeronautical Institute of Technology in São José dos Campos, Brazil.

Financial highlights and risks

For the nine-month period that ended on Sept. 30, 2016, Laureate Education reported it earned total revenues of $3.068 billion. During the same nine-month period that ended on Sept. 30, 2015, the company had total revenues of $3.141 billion. The company reports that its total revenues for the year ending on Dec. 31, 2015, were $4.21 billion. During the nine months that ended on Sept. 30, 2016, the company reported it had a net income of $327,722,000. During the same time period in 2015, it reported a net loss of $299,581,000.

Laureate has a substantial level of debt, which totals more than $4 billion. The company intends to use the proceeds of its IPO to pay down some of its debt. It recently conducted a funding round, raising $383 million through a private offering of the company’s preferred stock.

The company has also faced multiple challenges. According to its SEC filings, the former chief accounting officer of Laureate filed a whistleblower complaint against the company, alleging that Laureate violated SEC regulations. It is also investigating reports of corruption involving one of the company’s Turkish universities.

Conclusion: Consider Holding Off

While Laureate Education has demonstrated strong but declining revenues and went from a substantial net loss in 2015 to a significant net income in 2016, the company’s high debt level and potential problems with the whistleblower complaint and the potential corruption at one of its universities give us pause.

We recommend that investors hold off on this IPO and wait to see the outcome of those potential major problems. We would not be surprised to see this puppy price at the low-end or below the marketed price range of $17 to $20.

Laureate Education launches FCPA probe into charitable donation

Laureate Education launches FCPA probe into charitable donation

Jaclyn Jaeger | December 20, 2016

Laureate Education, a for-profit higher education institution, said that it is conducting an internal investigation into possible violations of the U.S. Foreign Corrupt Practices Act concerning an $18 million donation that one of its network institutions made in Turkey to a charitable foundation.

“We believed the donation was encouraged by the Turkish government to further a public project supported by the government and expected that it would enhance the position and ongoing operations of our institution in Turkey,” Laureate Education stated in a filing with the Securities and Exchange Commission. Continue reading

Laureate IPO still pending amid political flap, industry crackdown

Laureate IPO still pending amid political flap, industry crackdown

Douglas L. Becker, chairman and CEO of Laureate Education, takes part on a panel during the second day of Latin America Clinton Global Initiative in Rio de Janeiro in 2013. MUST CREDIT: Photo by Dado Galdieri, Bloomberg ** Usable by BS, CT, DP, FL, HC, MC, OS, SD, CGT and CCT ** (Dado Galdieri / Bloomberg)

John Fritze and Natalie ShermanContact ReportersThe Baltimore Sun

Arrangement with Bill Clinton put Laureate in middle of presidential election.
When Baltimore-based Laureate Education decided to go public last fall, the for-profit university system had just finished a rapid expansion and was preparing to reap the benefits of its newfound global reach.

A year later, the company still hasn’t listed its stock on the market and has become ensnared in the divisive presidential contest between Hillary Clinton and Donald Trump.

The company and founder Douglas L. Becker made news this summer when tax returns released by the Clinton campaign showed that Laureate had paid former President Bill Clinton millions of dollars to serve as its honorary chairman while it was acquiring schools around the globe and Hillary Clinton was secretary of state. Continue reading