Brazilian fintech focused on student loans, Pravaler makes its first acquisition: edtech Amigo Edu

The fintech wants to be an ecosystem of solutions for access to education; serving 1 million students and financing BRL 10 billion until 2025

Pravaler's HQ. Photo: Courtesy/Pravaler
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The mergers and acquisitions unit created in 2020 by Pravaler, a Brazilian fintech focused on student loans, started showing results this Wednesday (29). The platform has just announced the purchase of Amigo Edu, an edtech that works as an education marketplace integrated with benefits and digital student acquisition for more than 300 private institutions. The company aims to serve 1 million students, financing BRL 10 billion ($1.85 billion) by 2025. For this, it knows that it will need to become an ecosystem of solutions for access to education, and the M&A strategy is key for that.

Pravaler’s CFO, Haroldo Carvalho, told LABS that Amigo Edu’s acquisition path was natural, as the two companies had started a partnership in early 2021. “First, Amigo Edu has a very strong cultural fit [with Pravaler], a young spirit, a culture of innovation, and [it was created by] people who are very passionate about education. Amigo Edu has a great complementarity with us.”

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Today, the principal operation of Pravaler’s platform is the simulation of student credit. Students can have their financing pre-approved before enrollment, and pay for it in twice the duration of the course chosen. With Amigo Edu, Pravaler gains a broader range of products and services: courses (short-term options to professional programs), scholarships, and also a digital entrance exam solution, in addition to online tests and simulations applications.

Haroldo Carvalho, CFO at the Brazilian student loan platform Pravaler. Photo: Courtesy/Pravaler

Sometimes, students cannot get funding but have a scholarship, or they want to know what is the best solution for them (scholarship or loans, or a mix of both). With this integration [between Pravaler and Amigo Edu], we will be able to [offer] this

Haroldo Carvalho, CFO at Pravaler.

Founded in 2019 by José Roberto Dantas, Bruno Guedes, and Yan Tironi, Amigo Edu helped consolidate the online entrance exam as a safe and economically viable option for private institutions in Brazil. In 2020, more than 100 online entrance exams were carried out by the platform, with the participation of 500,000 students.

Pravaler has almost 20 years of existence and has Banco Itaú, one of the largest banks in Brazil and Latin America, among its main shareholders. Profitable since its beginning, Pravaler does not count on funding via venture capital funds. Instead, to sustain its financing wheel and continue to grow, the platform regularly works with the issuance of debentures and FIDCs (acronym in Brazilian Portuguese for investment funds in credit rights).

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The company completed the last issue of FIDCs, of BRL 176 million, in August, to finance university students in this second semester. Traditionally, Pravaler makes two FIDCs issues per year according to the volume of students to be financed. In 2021, Pravaler raised almost BRL 200 million ($37 million) in the first half (BRL 180 million in FIDCs and R$20 million in debentures).

So far, Pravaler has financed 180,000 students and a total of BRL 4 billion ($738 million). For 2021, the goal is to reach a turnover 20% higher than in 2020, around BRL 300 million. Amigo Edu’s acquisition is still awaiting regulatory approval.

The pandemic strongly affected demand for Pravaler’s services in 2020 and the first half of this year, when the platform saw a 25% drop in demand for its financing solutions. “We also expected an increase in defaults, but the fact was that institutions adapted very quickly, managed to build online platforms, and launch courses very quickly. Now, we already see payment volumes very similar to pre-pandemic volumes. And the entry [of new customers] in this second semester has already shown an increase compared to 2020. However, our great expectation is 2022”, says Carvalho, who says that Pravaler is still discussing the budget and has no targets set for next year.

Indeed, a survey carried out by Educa Insights and the Brazilian Association of Higher Education Supporters (ABMES) in June, with 1,200 people between 17 and 50 years old, showed that 43% of them intend to enroll in an undergraduate course next year.

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