Bloomberg Línea — With a degree in computer science, Paulo Silveira, CEO and founding partner of Alura, says he dreamed of being a university professor and researcher when he was studying for his master’s degree at the University of São Paulo in the early 2000s, but his plans took another turn when he and his brother Guilherme Silveira founded a programming school called Caelum in 2004.
Over time, the school gained prestige for its training of software developers and technology professionals in the country.
Now renamed Alura, the company grew in the edtech segment, offering online technology courses and notching up 250,000 subscribers. Revenues doubled in 2021 and are expected to grow 65% this year, to approximately 220 million reais ($42.5 million).
With the expansion, Silveira and his partners - private equity fund Crescera (formerly Bozano Investimentos, which featured finance minister Paulo Guedes as a partner) and Seek (an Australian group that owns the recruitment site Catho) - had the idea of entering the formal education market, and announced Thursday the the acquisition of a majority stake in Fiap, the São Paulo School of Informatics and Management, a private university focused on technology training with 10,000 undergraduate and graduate students, and one of the largest in the segment in the country.
The deal may double Fiap’s and Alura’s joint turnover projected for 2022, to 420 million reais ($81.2 million) and create one of the largest educational groups focused on technology, besides marking Alura’s entry into the higher education segment.
The acquisition still needs approval from Brazil’s antitrust authority Cade, and if it is approved, the current owners of Fiap will continue as partners and Gustavo Gennari will continue in the position of CEO, as well as the current executive team and the academic team.
The operation was financed by the Alura’s current investors and the value of the deal was not disclosed.
Crescera, led by Daniel Borghi and Jaime Cardoso, has a history in the education sector, and has been an investor in other groups that went public such as Afya (AFYA), Ânima (ANIM3) and Somos Educação, formerly Abril Educação and now part of Cogna (COGN3).
Challenging times
The acquisition of Fiap occurs at a time when the large education groups are facing the challenge of expanding operations in higher education-at-a-distance, which have lower tuition fees, and balancing the high costs of maintaining their physical operations to serve students in face-to-face education.
The investment in online courses is a way to attract students, while the enrollment of face-to-face courses, which are more expensive, is not growing because of the country’s bad economic climate and the still high unemployment rate.
“We see a movement of students returning to face-to-face classes, especially in health courses, in which the student needs a laboratory and hands-on experience. On the other hand, other courses have not yet seen a comeback. Bur companies are adapting to this,” says Henrique Vasconcellos, an analyst at Nord Research, which monitors companies in the sector.
In an interview with Bloomberg Línea, Alura’s Paulo Silveira said that if the deal to acquire Fiap materializes, his old dream of being a university professor will have come true, in a sense.
“Everybody knows Insper. Everybody knows FGV. Everybody knows PUC. Why doesn’t everyone know Alura and Fiap? We have always been very humble. But it is time to show our size, our relevance and history,” said the 42-year-old CEO, who also works as a developer at times.
He said that he himself made a point of including the Fiap logo in Alura group’s website.
For Silveira, the acquisition of Fiap allows Alura to act in different moments of the formation of a technology professional - offering from basic programming courses and specialization in the technology area to a more complete university formation, including training and updating.
“The deal [with Fiap] closes the lifelong learning cycle. We see that it will fill all the time slots [of learning] that the technology professional can go through.”
Nord’s Vasconcellos says the logical thing would be for a traditional education group to acquire the operation of a company focused on online courses, and not the other way around, as in the deal between Alura and Fiap.
He sees some hypotheses for the acquisition by Alura: to have a physical space that can also serve the students of distance learning courses, the possibility of offering complementary online courses for undergraduate or graduate students and, mainly, to use the credibility of the higher education brand to grow.
“The idea of Alura seems to me to have the brand and the credibility [of Fiap] and be able to do cross-selling with the students. For example: the student is taking a programming course, but wants to become a developer specialized in C++ and takes a separate course offered by Alura, at a discount,” says Vasconcellos.
“The advantage for the company is that it can sell two products to a customer who would only be paying for one.”
According to Silveira, Alura’s growth has been driven by the corporate segment, which already represents more than half of the gross revenue, with customized courses and training for employees. The acquisition should allow the offer of courses with the two brands Fiap and Alura and help in the expansion of Fiap’s distance-learning courses, so that the brand also gains relevance outside São Paulo, where it has three facilities.
The executive recognizes that a university degree is not a prerequisite today to work as a developer even in large companies, and that professionals often end up taking short courses to keep up-to-date - which is a challenge for the growth of Fiap’s business in the coming years.
However, he believes university education continues to be relevant, especially for the professional to continue developing their career and seek higher positions in companies.
“In the long run, having a college degree is, yes, relevant. It’s only in a college of systems analysis, information systems processing, artificial intelligence, and cybersecurity that the student will have a sufficient base if he or she really wants to go deep in the career,” he says.
Translated from the Portuguese by Adam Critchley