parthenon higher education seminar_july 16 2009_robert lytle

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THE PARTHENON GROUPBoston • London • Mumbai • San Francisco

Global Best Practicesin Higher Education

Opportunities in India for Entrepreneurs,

Philanthropists and Investors



THE PARTHENON GROUP

2

Education Sector Experience:Global Coverage

= On The Ground Education Sector Projects Completed

Pre-Kindergarten

K-12Career and

ProfessionalUniversity

Vocationaland Other



THE PARTHENON GROUP

3

c-

Education Centre Of Excellence:Representative Clients

http://www.netg.com/us/index.asp



THE PARTHENON GROUP

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Minsheng

University

CoveredIn IndiaProjects:

c-

Deep Understanding of EducationBusiness Development

Pre-Kindergarten

K-12Career and

ProfessionalUniversity

Vocationaland Other

http://images.google.co.in/imgres?imgurl=http://www.murugappa.com/news_events/media_kit/images/logos/Murugappa%20Group%20-%20New.jpg&imgrefurl=http://www.murugappa.com/news_events/media_kit/index.htm&usg=__10Ffxdlglt3f-Eh_TCf78LTyq4E=&h=764&w=777&sz=76&hl=en&start=1&um=1&tbnid=d-TwV9UUiovZLM:&tbnh=140&tbnw=142&prev=/images?q=murugappa+group&um=1&hl=en&sa=N

http://www.netg.com/us/index.asp



THE PARTHENON GROUP

5

GDP And Higher Education Enrolment Ratio

0%

10%

20%

30%

40%

50%

$0 $2,000 $4,000 $6,000 $8,000 $10,000

PPP adjusted GDP per Capita

E n r o l l m e n

t R a t i o

2004

2000

1995

2005

2000

1996

2005

2000

1996

2005

2000

1996

2005

20001995

Higher education enrolment rises with GDP

Chile

China

Mexico

Brazil

Turkey

Higher Education Enrolment vs. Income



THE PARTHENON GROUP

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0%

25%

50%

75%

100%

$0 $10,000 $20,000 $30,000 $40,000

Peru

PPP-adjusted GDP per Capita

E n r o l l m e n t R a t i o

Qatar

UAE

Nigeria

AlgeriaIran

Saudi Arabia

Venezuela

Colombia

Chile

Argentina

United Kingdom

Italy

GermanyFrance

Thailand

Republic of Korea

Philippines Malaysia

Japan

Indonesia

India China

United States

Mexico

Canada

Higher Education And National Income

Higher Education Enrollment Ratio vs. PPP Adjusted GDP Per Capita

R2 * = 61%

Economic strength and GDP per capita are closely linked to acountry’s enrollment ratio

Arab OPEC

Non-Arab OPEC

Other



THE PARTHENON GROUP

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To Support Economic Growth IndiaNeeds To Grow Its Tertiary EnrolmentBy 7.7MM Seats In 2014

0MM

10MM

20MM

30MM

2005

TertiaryEnrolment

10.5MM

IncrementalEnrolment

3.3MM

2008E

13.8MM

IncrementalEnrolment

7.7MM

2014F

21.5MM

$3.5K $5.4K$4.0K

11.4% 20.0%14.3%

$3.5K $5.4K$4.0K

11.4% 20.0%14.3%

N u m

b e r o

f S t u

d e n

t s

Enrolment Forecast for Higher Education, 2005-14

GDP/ Capita(US $ PPP Adjusted)

Gross Enrolment Ratio



THE PARTHENON GROUP

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India Higher Education: ~170K UnmetDemand For Engineering Seats In AndhraPradesh And Tamil Nadu In 2008

AndhraPradesh

236 K* 116 K 120 K563 K

Tamil Nadu 171 K 118 K 53 K448 K

Penetration 38%

Penetration 42% 2.0 Applicants/ Seat

1.5 Applicants/ Seat

Pass ClassXII

Appear forEngg. Exam

Secure Adm. inColleges

Current UnmetDemand

306 K

89 K

2013 Unmet

Demand



THE PARTHENON GROUP

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0%

20%

40%

60%

80%

100%

EngineeringCollege (TN)

90%

Chain of IndianEngineering Colleges

70%

China UndergradLiberal Arts

50%

Chain of IndianMBA Colleges

42%

8K 10K 3K4KEnrolment

E B I T D A M a r g i n

s ( % )

India Higher Education: Higher EducationBusinesses Realize > 40% Margins

EBITDA Margins/ Surplus for Higher EducationInstitutions in India and China

EBITDA w/o Value Added Services

EBITDA w/ Value Added Services



THE PARTHENON GROUP

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India Higher Education: Education LoansHave Grown At 27% Annually Since 2004

Total Amount Disbursed In Education Loans (2004-08)

Education Loans are thefastest growing segmentof SBI

HDFC has been in 9metros plans to reachout to tier II and tier III

cities via a hub andspoke model

0K

2K

4K

6K

2004-05

Rs3K Cr

2005-06

Rs3K Cr

2006-07

Rs4K Cr

2007-08

Rs6K Cr

211K 307K 361K 337K

A m o u n t I n R s

C r o r e s

2004-08

27%

CAGR

Number of

Accounts



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India Higher Education:Financing Of Higher Education

0%

20%

40%

60%

80%

100%

Awareness

Not Aware

Aware

Took Student

Loan

Yes

No

Reasons for not

taking student loan

Other reasons

Denied the loan

Process is timeconsuming

Parents paid foreducation R

e s p o n

d e n

t s ( % )

Q: Are you aware of thestudent loan facility?

Q: Did you take a studentloan?

Q: What was the reason

for not taking a studentloan?



THE PARTHENON GROUP

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Rs0Lakh

Rs2Lakh

Rs4Lakh

Rs6Lakh

Rs8Lakh

Engineering

Amity/ Manipal

Rs7Lakh

Management

Amity/ Manipal

Rs6Lakh

Humanities

Amity/ Manipal

Rs4Lakh

Rs2.0LakhRs3.0Lakh Rs1.5Lakh

T o t a l C o u r s e C

o s t

3 2 3Market PaybackPeriod (Years)

Average Annual Salary

Indian Higher Education: TuitionFees Reflect Market Conditions(Salary Levels Upon Graduation)

Undergraduate Course Pricing (4 Years) and Average Payback Period



THE PARTHENON GROUP

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0MM

10MM

20MM

30MM

1993 2008

I n d i a

C h i n a

M M S

t u d e n t s E n r o l l e d

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

India & China Higher EducationEnrolment Growth

Number of Students Enrolled in Higher Education (Degree & Diploma)

CAGR 2000-2008

China: 21%

India: 7%

China’s growth is driven by private for -profit universities

India’s enrollment growth rate must increase dramatically to capitalize

on its demographic demand



THE PARTHENON GROUP

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0

500

1,000

1,500

2,000

85-89

43

90-94

103

95-99

308

00-04

594

05-08

573

85-08

ASIA

EUROPE

USA

1,621

N u m

b e r o f T r a n s a c t i o n s

International Education Markets:Volume of M&A

International Education SectorM&A Activity, 1985 to 2008



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For-Profit Higher Education:Success Story Of Laureate

$0MM

$50MM

$100MM

$150MM

$200MM

1998

$29MM

2007

$161MM

T o

t a l E B I T D A

21%

('98-'07)

CAGR

42Number ofCampuses

Laureate Education EBITDA, 1998-2007



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How does one invest in a trust?

How does one realize investment?

What is the trade-off between short-term value creationand long-term quality?

Key Questions

parthenon higher education seminar_july 16 2009_robert lytle

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