Proeduca Altus: €111m revenue, zero debt, and a 7.5% free-float barrier

Proeduca Altus: zero debt, 4% dividend, and 53,000 students

Proeduca Altus does not need the stock market to grow. The holding company controlling the International University of La Rioja (UNIR) closed its 2018 financial year with a consolidated revenue of €111.087 million, a financial position with virtually no debt, and a business expanding through two simultaneous channels: online teaching and the acquisition of schools outside Spain. On paper, this is the profile any investor claims to seek. In practice, it has been stuck in an uncomfortable sideways trend for months.

The company is the head of a group operating mainly through UNIR, though it also has a presence at the University of Alcalá. Its jump to the Alternative Stock Market — now BME Growth — was sold as a move for transparency and to strengthen corporate governance. The promise accompanying the listing was concrete: to distribute between 50% and 70% of profits via dividends. This is no minor detail for a stock that trades in fixing and later moved to full-hour trading, though forum users feel volume did not trinc.

What universities and markets does Proeduca control?

The bulk of international activity is concentrated in Mexico. The subsidiary UNIR Mexico holds recognition from the country's authorities to offer 15 national higher education degrees online with official validity. The figure matters: the subcontinent already accounts for around 35% of the group's student body, and management has hinted that this proportion will continue to rise.

Expansion has not stopped there. The group maintains a 15% minority stake in Marconi International University, based in Miami, and in January 2019 acquired 80% of the Neumann Business School Postgraduate School in Peru. This was trinc by the most notable move: an agreement to buy 100% of the shares of the International University Marconi in Florida. This is in addition to the UNIR Colombia Foundation, recognized by Colombia's Ministry of Education as a non-profit institution.

The catalog of operations was completed with the purchase of KSchool for four million euros, a digital marketing school for professionals, and an agreement with the InterNations University of Guatemala. The strategy is clear: grow at home and, above all, abroad.

The boom in online teaching and ANECA accreditation

The business rests on a trend that shows no signs of ending. A study commissioned by UNIR from the Population Studies Group projects that the increase in higher education students in Spain will be driven mainly by postgraduate courses, with a 40% increase in students within fifteen years. The pandemic also served as a dress rehearsal for the entire sector.

In parallel, UNIR's Faculty of Business achieved institutional accreditation from ANECA, a recognition that, according to the institution itself, is held by only six other Spanish universities in these fields. It is the type of seal that does not move a stock price the next day, but which weighs in the market when attracting international students.

The Main Market barrier: €22.14 and a 7.5% free-float

Here lies the recurring problem with the stock. To jump to the Main Market, two things are required. First is size: a market capitalization of €1 billion, which equates to a share price of €22.14. The second is real liquidity, which is lacking.

The free-float — calculated by forum users as the sum of holdings by those owning less than 3% of capital — stands at 7.5%, far below the minimum 25% required. According to forum users, the chief executive concentrates more than 80% of the shares. With this shareholding map, any movement depends on someone deciding to sell shares. Some argue that the stagnation between €17 and €18 is due to a lack of news; others point out that the company discloses few material events.

Why is an exclusion offer (OPA) speculated for Proeduca?

The stock's statutes include a clause that does not go unnoticed: if the general meeting approves exclusion from trading without the favorable vote of a shareholder, the company is obliged to offer to buy their shares at a price justified under takeover regulations. From there to imagining an exclusion operation is a short step, and many have taken it. The reasonable doubt is the price: legal criteria include book value and liquidation value.

It is necessary to separate noise from facts. In January 2020, the board approved the purchase of 22,426 own shares at €7.60 each from Proeduca Summa, a company owned by the chief executive himself. Later, according to a forum user, the company owner sold shares at €9.86. There was also talk of an off-market sale of 40,000 shares, attributed by the same user to that shareholder. The circulating explanation, the usual one, is that this provides liquidity to highly concentrated capital.

Results, students, and the knot of the share price

The numbers support this. UNIR started the academic year with 45,000 students from 90 countries, 29,517 of them new, and a faculty of 1,669 teachers. According to a forum user, the group has gone from 34,000 to over 53,000 enrolled students in just one year. The accounts published up to August 31, 2020, were called brutal in the forum, and some expect revenues of €200 million.

The financial picture gives another clue: a dividend, according to calculations circulating in the forum, yields nearly 4%, and an expensive valuation, with a P/E ratio around 35-40. It is not cheap, and anyone trinc it knows that. For those who bought at €15.50 and see it at €17.50, the debate is not whether the business works, but when the price will break free. The board even repurchased own shares at €7.60; the stock closed at €14.80 and touched €18.

With these credentials, it is reasonable to think that double-digit growth will continue and that the jump to the Main Market will eventually happen. When and at what price, no one guarantees.