Apollo Group Inc., operator of the for-profit University of Phoenix, and private equity firm Carlyle Group formed a $1-billion joint venture to invest in education services outside the U.S.
Phoenix-based Apollo will invest as much as $801 million and own 80.1% of the venture, to be called Apollo Global, the firms said. Washington-based Carlyle committed as much as $199 million for a 19.9% stake.
Carlyle has the expertise and contacts to help find schools to buy and close the deals, said Trace A. Urdan, an analyst with Signal Hill Capital Group in San Francisco. Apollo shut its international operation a couple of years ago, he said.
Apollo executives "know what they're doing in terms of running educational institutions, but they've not been terrific investors to date," he said. "Carlyle obviously classes that up a little bit, but even they have yet to have a home run there."
Apollo Group offers education programs in 40 states, Canada, Mexico and the Netherlands as well as online. The University of Phoenix, founded in 1976, had 311,100 enrolled students in May.
Apollo and other for-profit education firms want to tap into markets in China, India and Latin America where governments can't afford to keep up with fast-growing demand for post-secondary education, Urdan said.
The announcement was made after the close of Monday's regular stock trading session, during which Apollo shares rose 73 cents, or 1.1%, to $65.93. The stock is up 82% in the last year.