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Bertelsmann becomes anchor investor in $100m University Ventures Fund

18 Jan 2012

Bertelsmann has partnered with other investors and education entrepreneurs to launch the University Ventures Fund I, a $100m vehicle in which the German media giant will serve as an anchor investor with a commitment of $50m.

The fund focuses on forming partnerships with universities to jointly develop higher education programmes in Europe and the US. These models combine the entrepreneurship, capital and management expertise of the private sector with the academic integrity, quality assurance processes, and brands of traditional institutions, the company said in a statement.

Education service models are entering mainstream higher education globally and include collaboration in areas such as online education, marketing & technology services and administrative support.

University Ventures has a committed capital fund of more than $100m. It is managed by a group of higher-education investors. Between six and ten education investments in Europe and the US are planned for the first few years, several of which have already been initiated.

The partnership with University Ventures secures Bertelsmann’s early entry into a fast-growing sector being transformed by fiscal retrenchment and advances in digital technology. These changes create significant opportunities for entrepreneurs, investors and strategic players to play a transformative role in higher education.

Bertelsmann may also make targeted direct investments as part of its cooperation with University Ventures. Through its investment in UV, the company aims to build scalable education platforms in its core markets of Europe and the US.

With an investment of $50m, Bertelsmann is the anchor investor alongside a selected group of LPs that include the University of Texas Investment Management Company (UTIMCO).

The fund’s managers are Ryan Craig, the founding director of NYSE-listed Bridgepoint Education, Daniel Pianko, the first outside director of Altius Education, and David Figuli, former general counsel to two state university systems, as well as Gregg Rosenthal, an education specialist from Bertelsmann.

Daniel Pianko said, “To address structural changes in higher education that will occur in the US and EU over the next five to ten years, University Ventures plans to build transformative education service organisations that partner with highly regarded institutions to develop better outcomes for students at a lower cost. Given Bertelsmann’s 175-plus year history and expertise in high quality content and services, we can’t think of a better partner to help University Ventures develop learning solutions for the 21st century.”

Initial investments include a partnership with Brandman University, a private university in California and part of the Chapman University System that provides undergraduate and postgraduate programmes for working adults. University Ventures and Brandman are working to establish a new college which will improve the Hispanic population’s access to higher education.

In Europe, University Ventures has established a new company, Higher Education Online, which is partnering with European universities to bring undergraduate and postgraduate degree programmes online. This allows the universities to make their programmes available to adult learners in their respective home countries and abroad.

The deal is not dissimilar to the music rights venture that Bertelsmann forged with global private equity major KKR in 2009, in which BMG Rights Management was integrated into an equity fund set up by Bertelsmann that allowed them to invest in the music publishing sector.

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