Advent Investing $142 Million Into Brazilian Education Company

Advent International has agreed to invest R$280 million (US$142m) into the parent company of Brazilian private education company Kroton Educacional SA (Bovespa: KROT11). Following the transaction, Advent would indirectly hold a 28% stake in Kroton.

Kroton Educacional S.A. (Bovespa: KROT11) – “Kroton” or “the Company”, one of the largest private education companies in Brazil, and Advent International, a global private equity firm, today announced an agreement in which PAP (Pitagoras Administracao e Participacao S.A.), the holding company that controls Kroton with 55% of its capital, will receive a capital injection of R$280 million from Advent International, R$220 million of which will be used to fund a capital increase in Kroton through a private subscription of additional shares in a total amount of up to R$387.9 million. After the deal, Advent will have 50% of PAP and indirectly approximately 28% of Kroton.

Kroton is Advent’s 15th investment in Brazil since 1997, when it started its activities in the country. Funding for this deal will come from LAPEF IV (Latin American Private Equity Fund IV) raised in 2007 and capitalized at US$ 1.3 billion. Since the raising of LAPEF IV, Advent has already invested in four companies in Brazil: Viena, Brazil’s leading casual dining restaurant chain, Frango Assado, Brazil’s leading highway restaurant chain, Quero-Quero, a home-improvement retailer in southern Brazil and CETIP, the largest central depository for private fixed-income securities and over-the-counter derivatives in Latin America.

Founded in 1966, Kroton offers primary, secondary and post-secondary education programs throughout Brazil. In the K-12 segment (kindergarten to high school), the company has 654 associate schools in Brazil that make use of its Pitagoras learning system. In the post-secondary segment, it has 28 campuses (17 Pitagoras units which offer 4- to 5-year undergraduate and 1-year graduate programs and 11 INED units which offer 2.5- to 3-year associate programs). Kroton has more than 43,000 post-secondary students and 226,000 K-12 students.

Since July 2007, when Kroton raised R$455.8 million (US$245 million) with its initial public offering on Bovespa, the Company has embarked on an aggressive expansion plan, which has included the acquisition of 12 colleges and the opening of new campuses. Today, Kroton has the highest growth rate of any education company in Brazil, with net revenues of R$279.6 million and EBITDA of R$51.5 million in 2008. In the first quarter of 2009, the company posted net revenues of R$ 107.5 million and an EBITDA of R$35.7 million, rising 51.4% and 37.6% respectively over the year-earlier figures.

“Kroton combines high-quality education services, a proven track record of organic and acquisition-led growth and a highly-skilled management. We believe the company provides a strong platform from which to consolidate the education sector in Brazil and we look forward to working with the management team to accelerate the expansion of the business,” said Juan Pablo Zucchini, a Managing Director in Advent International’s Sao Paulo office. Mr. Zucchini led the investment in Kroton.

“It’s a very fragmented market, with many opportunities ahead,” Mr. Zucchini added. “The Brazilian education sector has been growing at a compound annual rate of 10% over the past decade and is still characterized by a low number of students with post-secondary degrees, even relative to other countries in Latin America.”


This press release does not constitute an offer to sell or subscribe or a solicitation of an order to buy or subscribe for securities in the United States. Securities may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirement under the United States Securities Act of 1933. Kroton does not intend to register its shares under the Securities Act of 1933 and does not intend to carry out a public offer of its shares in the United States.


About Kroton Educacional

Kroton is one of the largest private educational organizations in Brazil, operating in the primary and secondary education segment for more than 40 years and in the post-secondary education segment since 2001. The Company operates on an integrated and diversified basis through its own schools and colleges, and provides education services, teaching technologies and teaching materials to a primary and secondary education network of more than 654 associate schools. Kroton has 28 post-secondary education campuses in operation. Kroton has 226,000 K-12 students and more than 43,000 post-secondary students.

About Advent International

Founded in 1984, Advent International is one of the world’s leading global buyout firms, with offices in 15 countries on four continents. A driving force in international private equity for 25 years, Advent has built an unparalleled global platform of over 140 investment professionals across Western and Central Europe, North America, Latin America and Asia. The firm focuses on international buyouts, strategic repositioning opportunities and growth buyouts in five core sectors, working actively with management teams to drive revenue growth and earnings improvements in portfolio companies. Since inception, Advent has raised $24 billion in private equity capital and, through its buyout programs, has completed over 250 transactions valued at approximately $45 billion in 35 countries. For more information, visit

Advent International in Brazil and Latin America

Advent International is one of the most established and successful private equity investors in Latin America. Since it began operating in the region 13 years ago, the firm has invested in more than 40 companies with a combined enterprise value of over $6.6 billion.(1) Its current LAPEF IV fund, capitalized at $1.3 billion, is the largest private equity fund raised for investments in Latin America. For the past four years in a row, Advent has been voted Latin American Private Equity Firm of the Year by industry peers in a poll organized by Private Equity International magazine.

Advent International has been investing in Brazil since 1997 and has completed several investments across multiple sectors including travel retail, food and beverage, business services, financial services, technology and telecommunications. In addition to Kroton, CETIP, Frango Assado and Quero-Quero, recent Brazilian investments include: Viena, Brazil’s leading casual dining restaurant chain, which was merged into International Meal Company; Grupo RA, the No. 1 Brazilian airport restaurant operator, also merged into International Meal Company; and Brasif, Brazil’s leading duty-free operator, which was merged into global travel retailer Dufry AG (SWX: DUFN) and subsequently floated on Bovespa (DUFB11).

(1) Combined enterprise value of Advent’s Latin American portfolio companies. Current investments valued as of March 31, 2009; realized investments valued at time of exit.