U.S. Education Gets $50 Million to Buy For-Profit Colleges
By RAJIV VYAS
Irvine-based U.S. Education Corp. has raised $50 million from Newport Beach-based ClearLight Partners LLC and Chicago’s William Blair Capital Partners LLC in what is Orange County’s largest private funding this year.
U.S. Education used the money to buy its first school,Silicon Valley College,and plans to acquire other for-profit colleges offering business, technical, technology, secretarial and other classes.
ClearLight contributed $25 million of the funding, with William Blair chipping in the other half. The deal closed two weeks ago.
“We have been looking at this sector for quite some time,” said Robert Healy, a ClearLight partner who worked on the deal. “The demand for skill labor is growing at an increasing rate.”
Healy, who worked on the U.S. Education funding for about three months, said ClearLight is open to investing more in the company.
This was ClearLight’s biggest investment since its formation in early 2000. Tokyo-based security services company Secom Co. is the sole limited partner of ClearLight’s $300 million fund.
U.S. Education bought Silicon Valley College a day after the funding. It counts four campuses in Northern California with classes in healthcare and technology. Silicon Valley College has yearly revenue of about $30 million. U.S. Education plans to add new programs to the school to boost revenue.
U.S. Education’s expansion plans include new facilities and classes in Northern California, according to Bill Clohan, the company’s president.
“There is a tremendous demand for nurses right now,” Clohan said, adding that a general business curriculum is in the planning stage.
The company also is looking at Southern California, including plans to buy existing colleges,some of these acquisitions could be announced in the couple of months, Clohan said.
“We would look at areas that are growing faster than the rest of the country,” he said.
U.S. Education will focus on facilities west of the Mississippi River.
“It’s easier to manage (that way) and there would be greater economies of scale,” Clohan said. “Fifty million is a good amount of money. There are number of opportunities for internal growth and adding additional locations.”
Clohan served as undersecretary of education under President Reagan. Viewed as a moderate, he was dismissed from the position in 1982 after rankling the right of the Republican Party, which wanted to do away with the Edu-cation Department.
Clohan, who was 33 at the time, wasn’t moving fast enough to dismantle the department, critics believed.
Clohan also is the former education counsel for the U.S. House of Representatives, and executive director of the California Association of Private Post-Secondary Schools.
U.S. Education was formed a year-and-a-half ago. It’s goal: to buy and build campuses and facilities for post-secondary education. Its business model is similar to publicly traded Santa Ana-based Corinthian Colleges Inc.
U.S. Education plans to grow by buying smaller companies, then start new programs and build into different markets.
By following a similar model, Corinthian Colleges has become a large, national post-secondary education provider with a market value of $1.2 billion as of last week.
ClearLight isn’t looking for a quick kill.
“We are patient with our capital,” Healy said. “Our goal is to build a very successful business.”
Looking to fund its business, U.S. Education approached William Blair and ClearLight a few months ago.
“We’ve been looking for a quality management team and a quality company,” in education, Healy said.
ClearLight is a middle market buyout and growth capital investor.
Besides U.S. Education, its portfolio includes five other companies, including Irvine-based Westec InterActive Inc., a security unit of Secom.
