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US Private Equity Fund Managers Lead Investment in the Education Sector – June 2015

by Allison Polchinski

  • 30 Jun 2015
  • PE

Investments in the education sector, which encompass portfolio companies focused on higher education, education technology and training, have traditionally not enjoyed as much prominence as certain other industries in the private equity universe; however, the industry has seen steady growth over the past 10 years, and a recent positive trend looks set to continue. Investor expectations for significant growth in education markets are likely to be driven by rapidly expanding global economies, new models for education (e.g. in line with technological advancement), as well as the opportunity gap left by tighter public sector budgets. 

Preqin’s Fund Manager Profiles database currently tracks 1,072 private equity firms globally that have indicated an interest in investment in the education industry. These firms span various investment strategies and locations, though Preqin data shows that this investment preference appears more prevalent in certain segments. 

North America houses the most private equity firms considering investment in the education sector (475). Asia follows, with 256 managers targeting private equity opportunities in the education industry, while Europe and the Rest of World regions trail behind with 199 and 142 firms respectively. The prominence of North America in this space is further reflected in Preqin’s fundraising statistics: of all private equity funds closed in 2014 considering investment in education, 65% of aggregate capital raised was by North America-based GPs. 

The US alone accounts for 43% of the 1,072 firms interested in education as tracked by Preqin’s Fund Manager Profiles. Some of the largest firms in the US, including Carlyle Group and Blackstone Group, will consider education investments as part of their wider investment focus. However, the US also has several firms solely dedicated to the education market. For example, New York-based University Ventures is currently raising its second venture capital vehicle; University Ventures Fund II is targeting $350mn for investments in the higher education sector across the US, Europe and Asia. 

Private equity activity in the education sector looks to see continued growth, based on strong fundraising figures including a 10-year high for total capital raised in 2014. Preqin’s Funds in Market module shows 158 funds currently on the road that include education in their industry preferences. Of these, seven are focused solely on investments in education and are seeking an aggregate $1.2bn. 

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