Planer

  • Home
  • About
  • Privacy
  • Contact Me
Home Kaplan buy Carrick Education and Franklyn Scholar in Australia

Kaplan buy Carrick Education and Franklyn Scholar in Australia

Kaplan have been recently been expanding their operations in Australia. Their first move has been the launch of Kaplan’s Global Diploma with local partners Swinburne and Murdoch universities. This allows a route through which students in Asia can start studying in their home country and then ‘articulate’ into partner universities, including Kaplan’s Singapore campus.

Kaplan’s second and more adventurous action has been to buy Carrick Education (est. turnover Aus$60m) and Franklyn Scholar (est. turnover Aus$20m). These are two different businesses with Carrick providing a range of services ranging from short courses; vocational and pre-university English programs, university preparation tuition and specialist undergraduate degrees (accounting and hospitality). Franklyn Scholar, on the other hand are a Registered Training Organisation, who develop and deliver accredited work based training courses for employers

Of the two deals, Carrick is more interesting as some of the complexities surrounding it show just how political and complicated the Australian education can be.

Carrick were an established local education company who according to local media reports were ‘in danger of going broke’ in 2010 after losing $13.8m. Seeing this as an opportunity to buy into an established private sector player, the state government-owned Holmesglen TAFE (an FE college) loaned Carrick $6.5m.  The then state Labor government said it was ‘aware of the transaction, and has sought assurances from the Board of Holmesglen that appropriate steps have been taken to protect student welfare and the tax payers’ interests’. This tacit support an example of the wider competition reform the Victorian government had introduced to the vocational education and training markets.

Holmesglen’s plan was unusual in several respects. Firstly, while the Australian education market is very competitive internationally, the Victorian state government’s reform agenda for the education sector had been tempered by the failure of Melbourne University Private, a venture led by the late President and Vice-Chancellor of the University of Manchester, Alan Gilbert, which lost between $20-$150m. In addition several recent failures of several local FE and training sector providers had prompted the government to announce it would, ‘continue to weed out incompetent unscrupulous education providers’.

The $6.5m loan was seen as a precursor to a takeover. What Holmesglen’s risk assessment hadn’t factored in was a change of government, with a new Liberal administration being elected in late 2010. The new Education Minister almost immediately announced a one year freeze on TAFE colleges investing in private companies, pursuant to a review of ‘governance arrangements’. This killed off Holmesglen’s plans and put Carrick back into play, with Kaplan and Laureate International soon emerging as possible buyers.

Kaplan won the race, but needed Holmesglen’s support. Holmesglen were keen to recover as much of their $6.5m (and interest) but ended up accepting a mediocre deal where Kaplan agreed to pay them $3m in 2015 and another $1m each year for four  years ‘consulting’ – a total of $7m over five years.

This disastrous deal highlights just how important risk management is for educational investors. Holmesglen’s management, board and advisors knew a state election was due and had they done their job properly would have taken soundings from the opposition whose polling numbers showed them in serious electoral contention. In the end Holmesglen will make a ‘profit’ of $500k, it’s better than nothing, but had they put their $6.5m into a long- term deposit with high street bank (Westpac currently offer 6.6% p.a.) they would have earned more than $2.2m!

CEO of Kaplan Asia Pacific Mark Coggins will be Acting CEO of Carrick, with founder Catherine Carrick, ‘remaining associated with the company for some time’ – Kaplan has already started a three-month strategic review. Ironically, while the Victorian government is still reviewing their ‘governance arrangements’, in NSW the new Liberal administration is already looking to introduce reforms forcing TAFE’s to compete with private institutions for public education funding.

Franklyn Scholar was established in 1998 by Ryan Trainor, Damien Moloney and Peter Laing. For Trainor, a Melbourne serial entrepreneur who founded his first business at the age of 23, Franklyn Scholar represents his most recent business success. With 300 staff the company has grown rapidly, but Trainor sees plenty more upside saying, ‘We have less than 5% of the market in Australia’. With three daughters all under four years old we suspect education will remain at the forefront of Trainor’s attention (and investments) for some time to come. Ryan Trainor has now left the business, but Damien Moloney takes over as CEO and Peter Laing will remain CFO/COO.

These deals give Kaplan a major boost in Australia, and are smart because they take advantage of:

  • Capacity, funding and risk management challenges impacting local players (market shakeout and consolidation)
  • The opening up of the state government-funded vocational and training markets to private providers
  • Established Australia-wide operations and clients for both Franklyn and Carrick.
Jun 24, 2011Richard Taylor
11 years ago Education0
Richard Taylor
Teacher's TV - the phoenix arises?The Australian government breaks the IELTS English testing monopoly

Leave a Reply Cancel reply

Archives
  • December 2022 (1)
  • November 2022 (1)
  • September 2022 (1)
  • July 2022 (2)
  • June 2022 (2)
  • April 2022 (1)
  • March 2022 (2)
  • February 2022 (1)
  • September 2021 (2)
  • August 2021 (2)
  • July 2021 (1)
  • June 2021 (1)
  • May 2021 (2)
  • March 2021 (1)
  • January 2021 (2)
  • November 2020 (1)
  • October 2020 (2)
  • July 2020 (1)
  • June 2020 (1)
  • April 2020 (1)
  • January 2020 (2)
  • November 2019 (1)
  • September 2019 (1)
  • July 2019 (1)
  • June 2019 (2)
  • May 2019 (1)
  • March 2019 (1)
  • January 2019 (1)
  • May 2018 (1)
  • June 2017 (1)
  • May 2017 (2)
  • April 2017 (1)
  • March 2017 (1)
  • February 2017 (4)
  • January 2017 (1)
  • December 2016 (1)
  • November 2016 (2)
  • May 2016 (4)
  • April 2016 (1)
  • February 2016 (1)
  • January 2016 (1)
  • January 2015 (1)
  • May 2014 (2)
  • April 2014 (2)
  • March 2014 (2)
  • February 2014 (5)
  • October 2013 (1)
  • September 2013 (2)
  • August 2013 (1)
  • July 2013 (1)
  • June 2013 (2)
  • May 2013 (4)
  • April 2013 (2)
  • February 2013 (3)
  • January 2013 (3)
  • September 2012 (2)
  • August 2012 (2)
  • April 2012 (1)
  • February 2012 (3)
  • November 2011 (1)
  • October 2011 (2)
  • September 2011 (5)
  • August 2011 (5)
  • July 2011 (2)
  • June 2011 (2)
  • May 2011 (1)
2014 © Media Taylor