Tuesday, July 8, 2014

Carlyle Group, TPG on "Modernizing" Education

WaPo ran a column by Carlyle Group Managing Director Julius Genachowski and TPG founder James Coulter on the need to increase technology in the classroom. 

The modernization of E-Rate, by bringing Wi-Fi enabled broadband Internet to our schools, creates the necessary backbone for the deployment of technology in education. We believe technology is the transformative lynchpin for moving the nation’s education system forward. For our teachers, Wi-Fi-enabled broadband Internet access in their classrooms in the early 21st century is the equivalent of heat and electricity at the beginning of the 20th century.
Their thesis is technology will make learning better, more effective. The question is what is being automated?  Private equity underwriters (PEU's) have transformed industries by shedding jobs, moving them offshore and replacing them with technology.

As businessmen and believers in free markets, we believe the private sector can and must be heavily involved in bringing technology to our schools.
And what role would Carlyle Group or TPG affiliates play in this transformation?  PEU's hire top government officials to garner the next federal honey pot.  At least one Carlyle associate focuses on:

"investments in the education, technology, communications, media and business services sectors."

I'm sure he's highly supportive of his bosses recommendation.

TPG's technology investments have included Alltel, Avaya, Crystal Decisions, Fidelity National Information Services, Hotwire, IMS, Intergraph, Lenovo, MEMC, ON Semiconductor, Sabre Holdings, Seagate and SunGard among others 

EducationWeek reported in July 2013:

An American private-equity company is acquiring TSL Education, Ltd., giving the buyer purview over a community spanning millions of educators and students—including members of the United States' second-largest teachers' union, through a platform that allows teachers to share resources with one another.

Access to an estimated 52 million teachers and students is said to be one reason U.S.-based TPG Capital, LLP is purchasing TSL.

Normal people have to reveal potential conflicts of interest.  Neither spoke to how Carlyle or TPG could benefit from their recommendation or how each could personally profit.

They also failed to speak to the education community.  What's their theory?  Show where it's been tested on a small scale and the impact.  What was learned and how was their theory revised?

The watershed moment could be another PEU industry onslaught.  There's plenty of information on their prior impact and the decimation they bring.

Update 7-14-14:  Apollo is big into education and owns McGraw-Hill Education which is  borrowing $400 million to pay Apollo its PEU dividend

Update 7-21-14:  Carlyle announced it took a majority position in Expereo, a global provider of Dedicated and Broadband Internet, Ethernet, Virtual Private Networks, WiFi, Equipment and On-site Professional Services to international carriers, cloud providers and integrators.