Ânima Education Buys FMU for R$410 Million

Ânima Educação has significantly expanded its educational footprint by acquiring Centro Universitário FMU for R$410 million. This strategic move is set to bolster Ânima's student base by an estimated 15% and boost its net revenue by 11%, reinforcing its position in Brazil's competitive higher education sector. The transaction marks a notable shift for FMU, which was previously divested by Ânima itself.

The acquisition's financial structure involves an immediate payment of R$240 million, with the remaining R$170 million scheduled for December 31, 2029, or three years post-closing, whichever comes first. This deal sees FMU transition from the ownership of the fund Camp Nou, managed by Farallon Capital. Interestingly, Farallon Capital had acquired FMU from Ânima Educação back in 2020 for R$500 million, highlighting a cyclical movement within the educational asset market.

FMU, a prominent private university in São Paulo with 58 years of tradition, faced financial headwinds and a decline in its on-campus market share in São Paulo from 9% to 6%. The institution also underwent a judicial recovery process, with a plan approved by creditors earlier this year. Ânima's leadership, including CFO Átila Simões, views this period as a restructuring opportunity, emphasizing FMU's strong brand reputation and core strengths in law and health sciences. Simões noted that FMU's previous focus on immediate revenue generation, rather than long-term strategic development, impacted its performance.

With 51,000 students across six São Paulo campuses and 214 distance learning centers, FMU represents a substantial addition to Ânima's portfolio. In the last twelve months, FMU generated approximately R$280 million in revenue, with an EBITDA of R$52 million, reflecting a margin around 20%. Ânima anticipates integrating FMU into its operational ecosystem will not only help reclaim lost market share but also significantly enhance profitability. The company aims to elevate FMU's margins to align with Ânima's own operational margins, which typically range from 34% to 47%, driven by economies of scale and shared infrastructure.

A key strategic advantage of this acquisition lies in FMU's established expertise in digital and semi-presential learning models, with 24,000 and 4,000 students respectively in these formats. This capability is particularly relevant given the recent regulatory changes in distance education, which mandate a shift towards semi-presential formats for courses in health, engineering, and pedagogy. Ânima CEO Paula Harraca highlighted that FMU's existing digital know-how and physical infrastructure are well-suited to navigate this sector-wide transformation, positioning the combined entity to capitalize on emerging opportunities.

The acquisition is projected to increase Ânima's leverage from 2.39x EBITDA to approximately 2.73x. However, the company expects to swiftly deleverage through enhanced cash flow generation and EBITDA growth. Ânima Educação, currently valued at R$1.17 billion on the stock exchange, had a cash position of R$1.8 billion at the close of the first quarter, providing a solid financial base for future growth initiatives.