Saturday, July 21, 2018
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Corporate Securities Info

‘Big business’ in education

What is it about schools that motivate some of the country’s leading business personalities to invest in them?

The Ayala business conglomerate, through AC Education Inc., recently announced its acquisition of 96 percent of the shares of stocks of National Teachers College, a school established in 1928 that offers courses in educational instruction.

The same corporate entity was used in 2015 by Ayala to gain ownership of the University of Nueva Caceres in Naga City, the oldest university in Southern Luzon.

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According to reports, Ayala is in talks with House of Investments, Inc., the investment arm of the family of late businessman Alfonso Yuchengco, for possible merger of their education businesses.

The Yuchengcos own Mapua University, a well-known engineering and technical school, and Malayan Colleges in Laguna and Mindanao.

In 2002, Manila Bulletin publisher and business tycoon Emilio Yap took control of Centro Escolar University, a school founded in 1907 that gained fame for its dentistry course but now offers other academic degrees.

The University of the East, once considered the largest university in Asia with its 60,000 student population, is owned by business magnate Lucio Tan of Philippine Airlines, Philippine National Bank and Asia Brewery, among others.

The person who topped Forbes’ list of richest Filipino businessmen in 2017 and earlier years, Henry Sy Sr., is the controlling stockholder of 118-year-old National University, the first private nonsectarian and coeducational school in the country.

Rounding up the list of business groups that have invested heavily in educational institutions is Philippine Investment Management, Inc., more popularly known as Phinma Group of Companies, headed by Ramon del Rosario Jr., which owns or manages, among others, Araullo University in Cabanatuan City, Cagayan de Oro College in Cagayan de Oro City and Southwestern University in Cebu City.

It has been observed that since the entry of “Big Business” in these schools, the quality of their faculty staff and physical facilities have considerably improved. This does not come as a surprise because their owners have deep pockets that can well pay for those improvements.

From a strictly profit-oriented perspective, however, it does not make good business sense to invest in institutions of learning. They are not cash cows that assure a steady stream of revenues that grows with the years.

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If the purpose of the investments is to increase their bottom line, the tycoons probably chose the wrong business to invest in. Although some schools may be described as “diploma mills,” that description definitely does not apply to the schools earlier mentioned.

Unlike the businesses that they’re profitably engaged in already—where market forces determine or influence the prices of the goods and services they offer to the public—educational entities are heavily regulated by the government and prone to political pressure.

For one, schools cannot increase their tuition and other enrolment fees without prior consultation with their faculty and students. And even if there are justifiable reasons to make upward adjustments in those assessments, there will always be people in the social and political sectors who will not yield to reason and bring their “grievances” to the streets.

Although good management may bring some modicum of profit in the operation of these schools, they may not be worth the effort considering the millions of pesos in investments and the troubles that go with handling activist teachers and students.

If profit is not the principal motivation for investments in education, what encourages these highly successful business people to deviate from their core businesses and take on an activity that, strictly speaking, should be undertaken by the government?

Absent any proof to the contrary, we can only assume that they are guided by altruistic objectives. They can be given the benefit of the doubt that their action is part of their corporate social responsibility.

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