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The International Finance Corporation on Wednesday announced a $150 million equity investment in Laureate Education, Inc., a Baltimore-based, privately held, for-profit education company that operates 65 career-oriented colleges in 29 countries. The investment is the largest-ever in education on the part of the IFC, an arm of the World Bank that focuses exclusively on the private sector in developing countries.

“It’s not a large investment relative to the capital base we have in the company, but the significance for us is relative to the strategic partnership we have with the IFC,” said Douglas L. Becker, Laureate’s chairman and CEO. “It’s very important for us in terms of credibility. A lot of people understand that the IFC and the World Bank have incredibly high standards for the environmental and social impacts of the companies that they invest in, and a company would have to be perceived as very highly credible in order to be fortunate enough to have them as an investor.”

According to Laureate, the IFC’s stake in the company is less than 5 percent. Both Laureate and IFC describe the new investment as important in terms of accelerating the pre-existing relationship between the two entities. In July, the IFC announced a $40 million loan to help build two new campuses of the Universidad Peruana de Ciencias Aplicadas, a Laureate institution in Peru. A similar IFC loan to expand the capacity of Laureate colleges in Panama is pending final approval.  

Atul Mehta, the director of global manufacturing, agribusiness and services at the IFC, said that the financing agency’s interest in Laureate stems from its proven ability to provide career-oriented education at scale in developing economies. (The company owns 31 institutions in Latin America, and three in the Middle East and North Africa.)

“One of our objectives is to put them in a position to expand more rapidly with deeper penetration in emerging markets,” said Mehta. He explained that the IFC’s corporate-level investment is not earmarked for any specific projects but may be complemented by additional project-level loans to help develop new Laureate campuses in Africa, the Middle East or Latin America.

“We’d like to see them in more emerging markets sooner rather than later,” Mehta said.

Private, predominantly for-profit higher education has expanded dramatically in developing countries, where the public higher education sector often lacks the capacity to respond to rising student demand. Even so, Daniel C. Levy, a distinguished professor at the State University of New York at Albany who studies trends in private higher education globally, noted that there seems to be something perplexing about a development-minded organization investing in a multinational for-profit education company -- “which is doing very well, thank you.”

“If the IFC’s going to invest $150 million, is this the best social investment they could make that would bring a ballpark similar profit?” he asked.

Kevin Kinser, an associate professor of education, also at Albany, said he sees the IFC's investment as fiscally strategic rather than altruistic. “This is not the same thing as the Gates Foundation giving a $150 million grant to Laureate,” Kinser said. “This is an investment, an investment that anticipates a return.”

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