Both the pandemic and a strong consolidation process contributed to change the education sector’s board. If before, large groups strengthened their presence through face-to-face teaching, the need for social isolation forced a rapid migration to online, breaking down resistance to this modality. With the chess pieces moving house, the dispute for first place in the ranking of the largest companies in the sector is heading towards being occupied by the company that best position itself in the face of recent changes, with the financial strength to continue in the consolidation process.
These are some of the research findings on the private higher education sector in the Brazil which will be released this Wednesday, 1st, by the consultancy specialized in the sector Hoper, with data from 2020 and the first half of this year. In the ranking of the largest companies in the sector, a company that was born dedicated to online education is emerging among the first places, positioning itself as a candidate to occupy the first place. Santa Catarina-based Vitru, owner of Uniasselvi, made one of the biggest moves in the sector by taking one of the most coveted companies in the education sector for several years, UniCesumar, valued at no less than R$ 3.2 billion.
With the acquisition, Vitru now has 635,000 students, now occupying the third position. Last year, before the movement, it occupied sixth place. Another one that gives a jump in the ranking is the anima, out of the blue Saint Jude, what bought the Brazilian assets of the North American Laureate, such as the Anhembi Morumbi colleges, and goes from 11th to fifth position this year. The acquisition, announced last year, was recently approved by the Administrative Council for Economic Defense (Cade).
“The blended education is the one that has more adherence with the post-pandemic student. THE UniCesumar he has always had a very high quality blended education, and the Uniasselvi also, but it has a more mass positioning, mainly due to the price, and UniCesumar is a little more premium, with a bigger ticket. Together they will provide spectacular market coverage. It’s almost unbeatable in the semi-attendance”, says the president of the hope, Willian Klein.
“Another fact that greatly affected this market was that the pandemic brought out a new student, who has the same appreciation for the experience of in-person with quality online delivery,” says Klein. In this process of change, face-to-face teaching will also need to be remodeled, says the president of Hoper. “Campies are transforming to offer new experiences. They will need to provide ‘maker spaces’, startup incubators and exchange environments for students”, he comments.
UniCesumar, founded in Maringá (PR) four decades ago, it will give to Vitru a balance sought by the entire industry. In addition to having distance courses with maximum marks in the MEC, has a degree in medicine – naturally, in person. This course, in addition to having better evasion and default indicators, has an average monthly fee of R$ 8,500. “Each institution has a lot to teach to the other”, says the president of Vitru, Pedro Graça, who says that, with the union, the dispute for market leadership will be a consequence.
Leaders under threat?
For now, however, the top positions are still occupied by cogna, out of the blue Anhanguera, company that suffered most from the pandemic and that has been facing the distrust of investors. One of the reasons mentioned is that the company, heavily indebted, took a long time to change its business strategy after the change in the faithful in 2015 – something that transformed the dynamics of higher education, as many companies grew anchored in the official financing program.
Proof of the radical change in the sector is that the former owner of Uniasselvi is Cogna itself, which disposed of the asset to comply with a requirement of the Administrative Council for Economic Defense (Cade) in 2016.
But the financial problems will not change the company’s strategy, he guarantees Roberto Valério, president of Kroton, which encompasses Cogna’s entire higher education operation. According to him, a digitalization process is already underway, which was accelerated by the pandemic. “We are seeing that on-site students are resisting going back to school every day at the university because they have adapted to the (hybrid) model,” he says.
However, Cogna continues to restructure. The company is evaluating all courses to find out which ones have more adherence to on-site and online, in addition to trying to make better use of the physical space of the campuses, since hybrid teaching will become a reality for students also on-site.
“We are renegotiating rents and closed 45 own units. This means that our strategy is to invest less and less in buildings and more in the distribution of education”, says Valério. One of Kroton’s investments was a partnership with the operator Tim for the creation of the joint venture Ample, platform to sell fully digital courses. “Tim alone has 50 million customers. We estimate that we are going to expand the annual enrollment of distance learning students by 15%”, says the executive.
Strength of face-to-face vs. online
The second position in the ranking is from Yduqs, ex-Estacio. The difference between it and Cogna, according to Klein, from Hoper, is that the former Kroton has been showing a downward curve, unlike Yduqs, which continues to grow. Already experienced in distance learning, with about 400,000 students in this modality, Yduqs, which has the brand on its umbrella Ibmec, believes that this will continue as an important pillar of growth, mainly due to the lower cost and ease of access to the interior of the country.
Although the pillar of online education is very important, Eduardo Parente, President of Yduqs, believes that the pandemic came to confirm the need for classroom teaching. “About 85% of distance learning students would prefer to be on-site, but take distance learning for lack of money, access or time”, he says.
For Yduqs, some acquisitions with a digital look may make sense. Recently, for example, it announced in June the acquisition of QConcursos, distance learning (EAD) for students seeking to pass in competitions and also in entrance exams.
It’s a similar path to what Anima wants to follow. The purchase of rival laureate represented more to the company than being the fifth largest company in the sector in the Parents in number of students. With the acquisition, the company entered the purest distance learning market and now has 61 thousand students in this modality. But, formerly, the company was betting on the hybrid education segment.
“Many did not understand our movement, but we wanted to move away from the dichotomy that EAD had a low ticket and inferior quality to a hybrid model in which the student would choose how much and how he would use it”, he says Marcelo Bueno, president of Anima. “The term EAD became pejorative, so we have to use technology to change that and make people never stop studying,” says Bueno.
Caution in the sector
Despite advances in certain areas, investors are still lagging behind education companies. All companies in the sector listed in B3 share declines since the beginning of the year. The biggest drop of all is that of Cogna, which has accumulated a drop of almost 32% since the beginning of the year and 73% compared to the pre-pandemic period.
For Daniel Damiani, partner at JK Capital, these numbers may change in the future with the advance of vaccination. “The sector is more discounted than it should be and many investors are just looking at the current cut. It is true that anything can happen, but companies are already showing that they are adapting to the new moment.”