Providence Bullish On New Media Education Plays

Providence Equity Partners is especially bullish on education deals, a sector he says is under-served by private equity firms, CEO Jonathan Nelson said Wednesday during a keynote interview at the PartnerConnect conference.

Education is the second-largest market in the U.S., at $1.3 trillion, Nelson said.

“The scale is eye-popping,” Nelson said. “Growth and importance is probably unmatched.”

Specifically, Providence Equity is especially interested in new media companies that are changing how education is conducted, such as its October acquisition for $1.64 billion of Blackboard Inc., whose mission, Nelson said, is to be “the digital hub” in schools.

Nelson said that improving education is an imperative in every country in which Providence is active. In China, he said that if you have post-secondary degree, you will exceed average income by 3x; in Brazil 2.7x; and in the U.S., 1.6x.

“It’s how countries will improve their standard of living, their quality of life,” Nelson said.

Nelson recalled feeling concerned for his children’s’ backs when he’d see them lugging around heavy bag-filled books years ago.

“That sounds nuts today, when all of that could be on a tablet,” Nelson said. “I think it’s early innings” for new media’s impact on education, he said.

Though Nelson said private equity firms have shied away from education because of regulatory concerns, there have in fact been dozens of private equity investments in the sector in recent years.